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How to Attract an Investor…

Are you in search of an investor in order to start or develop your business?  American investors offer the following advice to budding entrepreneurs:

  1. When networking, make sure you develop a relationship with prospective investors before presenting them with your business plan.
  2. You need to be persistent without being a pest! Michael Rhodes (of Syncubator) says, “Entrepreneurs need to learn the art of professional follow up without being pushy. There are techniques that entrepreneurs can deploy that will make them stand out from the rest. Hand written thank you notes go a long way. Follow up with the product sample, etc.”
  3. When presenting your business plan to an investor you need to be clear what your product is, and how you intend to generate profit from it. Robert Herzog (President of Robert M. Herzog & Co) advises, “Be very focused.  You may have a million spin-off and secondary ideas in your head, but you have to convey very clearly how you will walk before you will run. Be clear about what you know, and admit what you don’t know, if you try bluffing through what isn’t known or in place, it will come back to haunt you.”  Carol  Roth (of Intercap Merchant Partners) recommends you make sure you are “crystal clear” when describing what your business does, and “in plain, simple language that a non-native English speaker [would be able to] understand”.  For example, she says “a microwave, which heats up food quickly” is a much better description than “a device which uses various combinations of electrical circuits and mechanical devices to produce and control an output of energy waves to increase the temperature of edible items over varying periods of time”.
  4. Before approaching an investor, make sure you have researched and understood the process of raising capital, and also that you know a little bit about how that particular investor operates.
  5. Ensure your business plan is sufficiently realistic.  American entrepreneur Davis Jones (who has started various businesses in real estate, IT and healthcare) stresses, “Be honest with yourself and investors.  Have realistic, conservative projections and don’t let your enthusiasm overshadow your objectivity.”
  6. When making your business plan, think of a strategy for how to pay your investors back in the event your business fails.  Similar to making a will, it is not being negative – it is being responsible!
  7. Think carefully about whether your business is in face compatible with the interests of your potential investor.

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