There are times that a business needs to raise finance and find expertise. Finding a ‘dragon’ or ‘angel’ investor can be a good way of doing this. If you need to take your business to levels that are outside of your expertise and want to grow it quickly finding someone with the means to do this can be very beneficial.
The popularity of the TV Show ‘Dragons Den’ which is replicated around the world gives an insight to how a business owner should pitch their idea to the dragons that is the potential investors.
Here are some basic tips to follow should you ever require an investor into your business.
Prepare your pitch well but don’t try to memorize every word. Learn the key points by heart.
Think of awkward questions that you might be asked and think of ways to answer those questions. Expect some criticism and very direct questions.
Be very specific about your product and what it does. Be very concise and explain everything in as few words as possible. Be direct. You will understand your product but other people don’t. Keep things simple even with a very complicated product. What it does is more important than how it does it. What are the benefits to having this product?
Know what the competition in the market is for your product. If it requires patents do make sure that you have them.
It is vital that you know your numbers. How much a product costs to make. The likely selling price. How many you could sell in year 1, 2 and 3. If your business already is trading you need to know your current, future predictions and past figures. Never guess in front of the Dragons. Should a dragon ask a question to which you do not know the answer, be honest and say so. However if you do not know the basic answers you will not get an investor.
Be prepared to have the valuation of your company challenged. Know exactly why you need x amount of cash, what you are going to use it for and the likely return on that investment over 3 years.
Pitching is almost an art form, however facts make up for any shortfall in presentation skills. A true dragon is only interested in ‘what’s in it for them’ and it is all in the numbers and you as a person as far as they are concerned.
If you follow these tips with the right business offer you should find that your pitch to an investor will go well and you will be able to secure your dragon.
The Entrepreneur Club