4. Build the right team
The bottom line is, your team is critical; these guys will make your vision and business happen. There will be an expectation from investors that your team will comprise great commercial and creative skills.
Investors can be happy to invest in a credible team even when the actual business model still needs work – they won’t invest in an idea with the wrong people. It’s not always about a big, full-time team either. A small complementary leadership team heading the venture, backed by a team of strong contractors or partners shows flexibility and financial smarts.
5. What’s your end goal?
As with any relationship, the best way to work with an investor is over the long-term. Remember, you are going into the financial community to take your business to that next level, not to plug a short-term cash flow issue.
When you meet with an investor, be totally focused about what you’re asking for. £XXX will take your business here, while £XXXX will take it to the level beyond that. Are you just looking for a cash injection or do you see this a deeper partnership, from mentoring through to industry access and networking.
Where do you want to be this time next year? Five years? Investors will expect you to have clear answers here.
6. It’s not just your forecasts … it’s your assumptions
The final, really important issue is how to manage your financial projections when pitching for funds.
Start up forecasts have very little to go on… no trading legacy, model still in flux and so on. This is why so many fail to stand the test of time and market forces.
However, their function is rarely to convince an investor about your projected EBITDA in year 4, it’s to convince them about the way you think, the assumptions you make, and whether you’re an entrepreneur they can trust and believe in.
Andrew Weaver is CEO of LawyerFair.
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