To answer in one sentence to this question and in general, one could say that it is necessary to assemble three things: to have a project in concrete (1), to find potential investors (2) and to know how to sell your project to convince the investors ( 3).
If things are simple in theory, in practice it's a bit more complicated. Let's say it right away before getting to the heart of the matter: there is a 1% chance that your fundraising will succeed . Investment companies generally receive thousands of cases a year and throw them in the trash 99%. You will have to arm yourself with determination and patience .
To get closer to investors, you can start by using social networks – LinkedIn, Twitter, Facebook … Try to create a link, react to their posts, etc. Also think about targeting investors who are consistent with your project . Investment funds and business angels never invest in anything and everything. Try to learn as much about the targeted investors before you get in touch: their investment thesis, how they work, the different partners and their personality. It will take a little time, but it's definitely worth it.
When dealing with investors, you should seek to build a relationship of trust . You must reassure them, impress them and make them want to know more.
Do not prepare a long presentation of your project, because you would have all the chances to cause boredom reactions. At the first appointment , you must be able to describe your project in a minute or two .
Know that on average, it is only the fifth appointment that the deal is made and you receive the letter of intent that specifies the terms of the deal (share pack, valuation, amount …). The goal of the first meeting is to obtain a second appointment .
Never limit yourself to a small number of investors . On the contrary, you must target a sufficient number to be able to always bounce back, because you will inevitably receive many negative answers. This is part of the game. Be persistent and do not hesitate to introduce a form of pressure by multiplying appointments, contacting investors regularly by phone to maintain contact . It's up to you because investors rarely call back. In your reminders, always think about informing investors about the progress of your project. Never start by tackling the deal.
Did you know ? There are about 40,000 business angels in France and Germany, about the same number as in England. It is very little compared to the United States (where they are 10 times more), but enough to allow you to easily bounce back. When you feel that an investor is not interested, try to take advantage of his relationships. He must have it.
As soon as you feel interest on the side of an investor, go for it! Establish at that time a state of emergency and make them feel the competition. Investors need to be trusted, but also to be put in danger to speed things up. Ask them for an offer and negotiate the contents of the letter of intent if you feel that you have the ascendancy. In general, this is the case: when the investor makes you an offer, it is you who are in a position of strength .
Afterwards, always be aware that a deal can always be canceled by the investor at the last moment . The deal is really only recorded when you receive the money in the bank account. Again, raising money is not a long, easy river. You may have the opportunity to discover it. You have to know how to handle failures to better bounce and never lose morale!
The latest tips to avoid going into the wall
Finally, here is a list of tips for getting the most out of your fundraising campaign:
- Do not spam investors . Constituting a mailing list of hundreds of investors and sending them bursts of non-targeted emails is the worst mistake.
- Do not underestimate the time needed for fundraising. Except for a miracle, a fundraising operation lasts at the (grand) minimum of 4 – 6 months.
- Do not arrive after the battle. No need to target investors who have just signed a deal with several projects similar to yours .
- Do not be too greedy and do not overestimate the value of your project to get more money.
- Continue to advance your project for the duration of the fundraiser . Be interested in the market, probe all your competitors, try to find your first customers. Do not spend all your time on your business plan. You must put your hands in the grease without waiting.
- Encrypt your entrepreneurial project , using a dozen relevant metrics. Investors want something concrete, not blah …