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How to Generate Business Funds through Investors?

This article will give a deep touch on how to network investors and make the most out of them.

Contrary to popular belief, “business plans do not generate business financing “, there are many kinds of financing options that require a business plan, but nobody invests in a business plan. Investors need a business plan as a document that communicates ideas and information, but they invest in a company, in a product, and in people. ~Tim Berry

Why you need an Investor ?

Business growth often requires outside funding. Working capital is required for daily operations. Investors simply provide funds in exchange for an ownership stake or future return. Typically, a partner takes on a company role, while an investor simply provides an infusion of cash. ~Business Resource

An entrepreneur must know the right materials to prepare and then learn how to maintain a conversation with a potential investor.

Prepare Your Materials

When you start meeting with investors, and have them interested, they’re going to ask for materials. Don’t kill the momentum by taking a week to work on them. The materials to prepare are:

An investor presentation (Powerpoint)
Historical financials (Excel)
Projected financials (Excel)
Legal term sheet (PDF)

It’s incredibly difficult to raise money from people you don’t know with just an idea, or without any kind of meaningful traction. Unless you’ve started a company before and successfully exited, the investor will most likely be looking at the trajectory of your business.

It’s essential to have a grasp of the key economic drivers of your business. If you don’t have a math or economics background, I’d strongly recommend spending a lot of energy with other entrepreneurs to understand how to build a good projected model to incorporate into your presentation. ~Fan Bi

Getting to Know your Potential Investors

Save yourself time and money by conducting thorough research on potential investors. What are your potential investors like as individuals? Have they invested in businesses like yours in the past? Do the tenets of your business mesh with theirs?

Get to know them well enough that you can interact with them on a personal — and even spiritual — level. Find investors with interests and beliefs that mirror yours, and your chance of success will dramatically increase. ~Roshawnna Novellus

Pitch a Return on Investment
While investors may believe in your business, their investment is ultimately a means to an end—they need to make money on their investment. So, it’s important to highlight what they will personally gain from investing in your business.

“Whether you’re pitching an angel, Venture Capitalist, or your rich uncle, it’s imperative to show how you’re going to get them a return,” explains Nick Braun of

“It’s tempting to focus on yourself and your business model, but ultimately, investors want to know what’s in it for them. The best way to stand out and get interest is to clearly illustrate how and when you will get them a return.” ~Briana Morgaine

Maybe you’ve read about or seen one of the new equity-fundraising platforms that have popped up over the last couple of years; two of the biggest are AngelList and Gust. ~Fan Bi

The following excerpt from wikihow will guide you to;

Make a Memorable Presentation

Starting a conversation with a potential investor can be easy for some entrepreneurs while for others it may not be so easy. Some entrepreneurs are intimidated when approaching potential investors. Some are not intimidated at all. Whatever the case may be, there is more to just start a conversation with a potential investor.

You’ll probably make a presentation to investors, which can take many forms. For example, you might make a PowerPoint presentation or create a booklet for the investor to flip through. With other investors, you’ll simply sit and talk.

Whatever form your presentation takes, it’s important not to simply repeat the contents of your business plan. Yes, the investor wants to understand your financials, which is why you have a business plan handy for them to take and read. However, it doesn’t hurt to get creative. Show the investor your product or service.

You need to give the investor a concrete idea of what your business does. Remember that pictures are more memorable than words. If you create a PowerPoint, don’t fill it up with text. Be brief.

Ask for advice at the first meeting

Don’t dive right in and ask for money. A potential investor needs time to mull over your business idea before they can decide whether they want to invest.

Accordingly, you should spend the first meeting tapping the investor’s business knowledge. However, you can subtly work money into the discussion.

For example, you can say in an offhand manner, “I’ve been thinking I’d need $130,000 to open a new store in that location, but I’d like to hear from you if there are hidden costs you’ve found in your experience…”

Be honest

An investor won’t cut a check until they perform due diligence. They’ll want to take a closer look at your business financials, and they will uncover any misrepresentation you make.

Always be honest in your business plan and in your conversations with potential investors. Admit when you don’t know an answer. An investor will appreciate your honesty. If you lie to one investor, then they will talk to others in their community. You’ll get a bad name and not be able to find any investors.

Project confidence

Potential investors want to see that you have faith in your business. Avoid being arrogant, which shows that you are insecure. Instead, project quiet confidence in the following ways: Listen. Insecure people chatter all the time and laugh awkwardly to fill up silence. Be prepared to listen. Stand up straight. Put your shoulders back when you sit and stand. Make eye contact when talking and listening to someone. Avoid fidgeting.

Remember to ask the investor questions

Any investor will take an ownership stake in your business. Accordingly, you’ll need to vet them as well. Ask the following questions before agreeing to work with someone: What other projects are they investing in? Check whether or not they are similar to your business, or whether they are in different industries. When was their last investment? If the investor hasn’t been investing in a while, they may not be serious. How do they plan to increase your company’s value? What factors will you consider before deciding to invest? How active do they want to be in the business? Does the investor want a seat on the board, handle day-to-day operations, etc.?

Follow up with the investor

After a first meeting, thank the investor by sending them an email. It’s unlikely that they’ll agree to invest after only one meeting, so you want to keep the doors of communication open. A short, professional “thank you” email can do the trick. You can also keep the investor updated on the progress of your business. For example, if you were rolling out a new product, let them know how it is going.

Stay professional if rejected

It’s hard to tell why people choose not to invest in businesses. You might not have been a right fit, or they might have already chosen to invest in a similar business. Regardless of the reason, you can control how you respond. Stay professional and thank them for their time. Remember that you might run into the investor later down the road, when they are more willing to invest in you. There’s no reason to burn bridges right now.

Keep trying

Avoid being discouraged if you don’t get many offers, or if every presentation you give results in a rejection. You probably haven’t found the right investor yet. Keep searching, because the perfect investor may still be out there.

References: Business Resources, BPlan, Forbes, Shopify and Wikihow. Photo Credit: I.G.

1 thought on “How to Generate Business Funds through Investors?”

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