Developing a product based business requires a certain level of capital, regardless of how cost-effective your process is, there will always be a necessary investment. For many entrepreneurs who have a vision bigger than their bank balance, this can be a hurdle that prevents business growth. Securing investment from a third party becomes the only viable option but with so many other businesses in the same position, there often seems like there is more people wanting money than actual money available. So how can you prepare your business and your pitch to give your product the best chance of investment? Take our 7 tips here and get ready to sign that cheque.
1 Get clear
You might think it is all about the product but actually, investors are investing in you too. They want to be confident that you can be trusted to spend their dollars effectively and that you will drive the business forward so that they can see a return on their investment as soon as possible.
When you present your product to an investor make sure you are absolutely clear about your business vision and your plan to get there. Be clear and be confident.
2 Protect your product
We would like to think that we live in a world where we can simply implicitly trust everyone but sadly this isn’t true. Although it is only ever the minority of people who will take advantage you want to make sure that you take steps to protect your product before you present it to anyone. This involves trademarking your designs and copyrighting your materials and patenting any part of your design that is unique. You want to have a paper trail that proves your business is yours so that you have legal protection if anything goes awry.
3 Do your research
An investor will want to see that you understand the industry, your audience and your ideal client. The way to show evidence of this is through extensive research. You need to show an understanding of who your product is for, what their challenges are and demonstrate how your product provides a solution.
4 Know your numbers
At the beginning of your business journey, estimating the value of your business can be a difficult process but a worthy one that could make or break an investment opportunity. Go over your numbers with a fine tooth comb and then go over them again. As you walk in to make your pitch you want to be able to answer their questions without a seconds thought. If they are going to trust you with their money, they need to see your confidence when dealing with the money you already have.
5 Tell the truth
It can be tempting to exaggerate the truth to make your business sound like a more sound investment or to demonstrate past success. A wise investor will not just take your word for things anyway, they will go through your books and your numbers themselves and as experiences business investors they know what to look for. Even if you embellish the truth a small amount they will find out and this breach of trust will destroy any potential relationship and chances of investment.
6 Give them a reason to care
You want to be very clear in your pitch what they will get out of the investment. When will they expect to see a return and how much for. Again this comes back to research and knowing you’re numbers. The work you put in here allows you to give the most accurate forecasts possible and show you’re realistic but ambitious.
Don’t forget, it isn’t always about money, there might be additional benefits to your product that to present as well. Take the time to research your audience, understanding the values of the people you are pitching to can help you tap into their individual vision, experience and characteristics. The values of your product may be alignment with theirs, maybe you’re trying to establish yourself in an industry that they know well, maybe it is a product that they would simply love to use themselves.
Work out what your angle is and this might be different for each investor you pitch to. The key is to give them a reason to invest that is both financial and emotional.
7 Try again
Failing to get investment on your first attempt, does not mean you will not succeed. Be prepared to ‘fail’ and recognise that it is just part of the process. Every time you enter a pitch you have an opportunity and if you don’t get the money then you may be able to take away key learning points that you can build upon for next time.
Those who have true desire for success do not give up.
Nexus IE supports businesses to bring their product based innovations to life with a cost effective manufacturing solutions. For more information on what we can do for you contact us here.