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How to Prepare for a Meeting with an Investor

Eric D. Gordon

May 16, 2017

Let's say you have a terrific idea for a new product or service. You have a solid business plan, the necessary patents, and the right drive to get it done. What you don't have is enough seed money to get started. So, you have to meet with investors to try to drum up the funds. You're nervous. You're scared. You must, however, be ready to "wow" them and to answer their tough questions. Here are few ideas on preparing for such a meeting:

Know Whom You're Asking

The greatest pitch in the world will fail if it's delivered to someone who isn't interested. For example, if you plan to market a newfangled whiz-bang, then asking someone who invests only in real estate for money to help you produce them is just plain folly. It pays to do your homework. Study the portfolios of the investors whom you plan to approach. Get to know them so that you can project an air that you care about them even if you don't.

If anyone in your network of friends and associates has had dealings with your investors before, pick their brains. Find out what made these investors say "yay" or "nay" to other entrepreneurs previously. If they're famous and have given interviews on television, watch them and see how they react to the body language of the interviewer.

Show How You're Different

What is it that makes your whiz-bangs better than the competition? If you provide a service rather than make a product, why is your service delivery superior to the competition? Find out what others are doing. Mix that data with the information you gleaned from researching the investment histories of your prospective investors. Craft a proposal and a business plan that not only fulfills your need but also shows investors how what you do or make will benefit them.

Be sure to know the ins and outs of your competitors' products and procedures. Highlight ways your investors will see a bigger return on investment with you than with your competitors. Plan for the next five, 10, and 15 years. Show that you're not just about "the next quarter."

Summarize your plans, aspirations, and strategies into two pages and present this at the first meeting. Have the "real thing" saved on a succession of thumb drives to give to your potential investors for them to read at their leisure. Not only are they easier to carry than reams of paper, but they are easier to pack with eye-catching information packets.

Know How Much Money You Need

Don't make the understandable but preventable mistake of asking for less than you need just because you think "cheap means yes." Investors are savvy, and they'll know how much you need.

If you ask for less than that, they'll either think it's a trick to get them to say yes, you don't know what you're doing, or both. If you need $5 million for the next 18 months, ask for it. It will show the investors that you "mean business" and that you respect them enough to hide nothing or to try little tricks.

Speaking of Respect, Always Tell the Truth

Don't sugarcoat anything. Don't promise the moon and the stars if all you can give them is "the moon." Balance your enthusiasm and excitement with realism. Know your limitations and work within them. Present what you know you will be able to accomplish within the parameters of your business plan instead of presenting what you dream about.

Never evade a question. Be aware of rephrased questions and answer them all the same way if possible. Don't "people please." If you truly believe something, go with it. That falls under the category of "always tell the truth."

Most important of all, if you don't know the answer to one of your investors' questions, say so. Don't ever make something up to "fill the silence" or "just to hear yourself talk." Smart investors are very good at smelling that which comes out of the back of male cows. Put the shovel away and simply say, "I don't know," if you really don't know something. As a corollary to that, always have a bunch of sources lined up that you could consult to find the answers to the tough questions.

The Bottom Line

Most investors gravitate toward entrepreneurs who are confident, knowledgeable, and practical. They want to know that they will recoup their money at some point in the future.

If they say no, don't give up. There's nothing to guarantee that they will always say no. If you improve your presentation, especially after having learned from any mistakes you made the first time around, you might very well get them on board. By being respectful and courteous, you might even score big networking points with your investors and be able to bank them for the future. Good luck!

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