How to Talk to Investors

As an entrepreneur or startup person, the opportunities to develop relationships with VCs have to be treated like gold. And if you are doing your job in terms of getting your ideas out there and meeting your fellow startup people, chances are you are going to run into an angel investor, banker or even a venture capital investor. You might even make plans to attend an event where a VC is speaking.

But are you prepared to take advantage of those encounters to help your business grow? A couple of points from Barry Schwimmer:

  • Know your audience.  The VC’s sole job is to make money.  There are many competing opportunities.  Focus on value creation.
  • Who do you know in common? VCs like points of reference. Be able to provide some.
  • What’s your track record? Why is the VC backing YOU?
  • Know the players. Who are the firms and specific partners that have recently invested in your space?
  • Know your numbers and be able to discuss customer acquisition Don't be the only one talking -- that's not a conversation.costs, inflection points and margins with comfort.

Here are 3 additional steps (from me) that you can take to enhance your ability to make a chance encounter (or even a planned one) into a mutually beneficial relationship.

  • Be net, and provide context. Describe your startup as part of a hot category or trend: “It’s like Tinder, but for cats.” Or, “It’s like AirBnB, but for coffee.”
  • Don’t spill all the beans. Put out your clearly stated idea and see if you get a response. You want a conversation — if he/she is not engaged, it is unlikely they will recall your conversation. If you are the only one talking, you have failed.
  • Be prepared with facts. Do you know other investments the VC or angel investor has made? Bring them up, and be aware that investors rarely invest in more than one company in a given sector.  And put your business into context in relationship to established companies that the investor might know:  “The other players have lousy margins – ours are better because…” – or “Company X beat us to the market, but we are launching tomorrow and we plan to be the fast follower and be different because of …”

Your goal is to get the investor to spend more time with you at a later date.  Be polite, thoughtful and recognize that he or she might like to to get to the bar get some food, say hello to a friend, or talk to other startups.

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