5 Ways to Woo an Investor

Published: 02 July 2018

MYOB

Things to know when raising capital through equity investment

Let’s face it: if you’re looking to scale your business, you’re probably going to end up looking to raise capital through some sort of equity investment.

While demand for capital is quite high, here are five ways to woo an investor and increase your chances of raising that capital – the oxygen that will allow your businesses to grow and breathe.

1. Show them why you’re a good fit

Investors consider their portfolio companies part of their family.

While different family members have different personalities and characteristics, they all share the same DNA. If you really want to woo the investor that you’ve approached, make sure to do your background research on the companies in which they have already invested.

If you find similarities between your offering and those companies and incorporate that in your approach, the investor is far more likely to welcome you into the family.

2. Approach them with the right mindset

Many startup founders I speak to seem filled with scepticism when it comes to raising capital.

They often believe that with the high number of businesses seeking funding, they don’t stand much of a chance in getting some for themselves.

It’s important to remember that the investor needs you just as much as you need them. 

If you’re approaching a VC fund with a business that you believe is compelling enough to receive their investment, the investor should feel privileged to be the one that you have chosen to give them a piece of the action.

On the flipside, while it’s important to be confident when pitching for capital investment, it’s important to be careful to stay away from arrogance.

Paul Naphtali, managing partner at Rampersand, said a common pet peeve of VC investors was running into an arrogant pitcher.

“It’s important to be confident, but not arrogant,” he said. “We’re interested in a high-growth venture, not whether you pitch yourself as the founder of the next Facebook.”

If you can manage to merge confidence and humility within your approach, an investor is more likely to look at you more favourably.

3. Show them that you’re in it for the long term (but fools rush in)

As Will Rogers said, you never get a second chance at a first impression.

Ben Williamson, co-founder of dealPad, compared an initial meeting with an investor with going out on a date.

“It’s like going on a first date,” he explained. “If you ask the person you’re dating to marry you on the first date, you’ll be coming on too strong. First you need to get to know them, impress them and ultimately develop a long-lasting relationship with them.”

If you want to woo an investor, don’t jump the gun. Slow and steady wins the race.

4. Prove your value proposition

While passion, excitement and vision are important attributes of a founder, these characteristics alone won’t be enough to bring an investor on board.

You need to prove that your business offering is capable of turning over significant profit.

If you can create a compelling business case that proves to be a model that will bring significant returns to the investor, you’re well on your way to receiving their buy-in.

5. Teach them something new

When you finally reach the point that you are ready to pitch to an investor, the quality of your presentation is very important.

One way to make sure that your presentation is impressive is to deliver novel, research-based information.

If you provide insightful data and calculated figures that aren’t readily available through the likes of Google or Wikipedia, the investor is more likely to be interested in your offering.

“The most effective way to ‘woo’ an investor is to demonstrate traction (users, customers, agreements, net promoter score) and insight,” Alan Crabbe, co-founder of equity crowdfunding platform Birchal, said. 

“Experienced investors want data and insight that no one else gets.”
 
If you really want to woo an investor:

• Show them you belong in their portfolio
• Be confident, but humble
• Show them you’re in for the long haul
• Demonstrate that you’ll make them a profit
• Make sure they walk away from the meeting having learnt something new

This insight was brought to you by MYOB, helping businesses succeed. To read more insights to inspire success, head on over to The Pulse by MYOB