Investor Funding & Capital Q&A

@Ananda Raj Pandey - It's important to building a relationship first before discussing money. You want to find people who have an interest in your business / product / what it is you're trying to do.  Check out this article too - https://www.savvysme.com.au/article/1745-investors-for-startups-where-to-find-them
 

Yee,

Thanks for asking. I think most startups believe their presentation or "pitch deck" has to wow the investors. But that is not always what draws them in and excites them.

Yes, investors want to see that you have an interesting product or service, but it can't end there. They will find accurate numbers interesting, accurate being the key word. If you have a growing number of users show them. But keep in mind they will be interested in knowing how active and engaged to your product or service your users are. If you are constantly gaining new users to replace the ones that aren't staying, they will probably not be very impressed.

Another thing they look at is your team dynamics. Do you work well together and share the passion of seeing the venture through and growing it, or are you just a few people that are good at what you individually do? Sometimes investors are more interested in the team you have put together than the idea. They may in fact look to fund you but send you after another idea.

This is an extension of the team dynamic, but they may look at your team's experience. Are you all first time founders? They may be a bit more cautious if you are. You can offset this by having a solid set of mentors or board of advisors on your team (even if they don't get involved in the day to day operation).

Investors are also looking for honesty. Don't claim you have no competition (they will think you haven't done your research). Don't project overly opportunistic numbers so far out they are meaningless. Keep the numbers you show them honest and use them to your advantage.

To sum up I believe investors are looking for:

• a great product/service or a willingness for the team to transition to a new idea
• a team that works well together
• passion to scale the venture into a sizable company

And a bonus is:

• a great presenter that can sell themselves, the team and the business convincingly

Some stats for you. 88% of new business use the Entrepreneur's, family, friends, neighbours, etc. funds. 8% use Business Angels and 4% use Venture Capitalists.

Money from freinds and family is also easier to obtain since they believe in you. When you go to strangers, you are in sales mode which makes it challenging... always check out any grants that are available too (although they can come with reporting strings attached).

I'd only recommend selling equity (i.e. .to Business Angels and Venture Capitalists) when every other single avenue (including banks) has been exhausted.
 

Yee,

This is a fantastic and difficult question to answer. It's a tricky topic because it has to be judged on an individual basis and agreed to by the team (or at least the majority).

Some people may say, take any offer you can get it is better than continuing to bootstrap. I would argue, that may not be the case. When you are bootstrapping you must be more aware of how each dollar is spent. When you get an investment, you may not be as thoughtful or creative on how you stretch the budget.

Also, don't just see it as the amount of money they are giving you (in terms of the trade off for equity in your venture). Are they also bringing their knowledge of the business world and making it accessible to you? Are they giving you access and recommendations to their network? The team needs to be comfortable with the percentage of equity for the monetary infusion.

Example, if an investor offers $100,000 for 45% of the company's equity some founders may see that as a quick way to grow the business while other founders may balk at giving up such a large percentage of their venture. It is a combination of your team's comfort level, your overall gut reaction and your ability to trust that the investor is trying to better your venture.

It really comes down to what the team agrees is a fair or reasonable trade off between the monetary infusion, networking and resources verses losing some control of the overall business. Once again, great question.

Mick, I agree with Jef and Adrienne, may I also suggest some entrepreneurial pitch meet ups in your area.  This can be a great place to get your pitch right and to uncover any objections, issues or scenrios you may not yet have discovered.  Good Luck!

There are several meetup groups which run "piching" events. Head along and there may be some Business Angels in the audience.
 

I'd imagine that you can get last-minute catering services if it is a small event, meeting, lunch break or tea. I know you can order Subway catering online with less than 24 hours notice, provided the Subway store is nearby your office. Some stores do delivery while some only offer pick up. They do sandwich and wrap platters, drinks, cookies, etc. It is a good option for when you need a light lunch or refreshment for your employees or visitors.