Many startup founders want to launch their new venture with as much capital as possible. As entrepreneur Vinod Ramchandra Jadhav explains, this sometimes necessitates outside funds from secondary sources. In this case, entrepreneurs will have to communicate with potential investors to engender a sense of confidence in the success and feasibility of their business.
At the same time, you’ll also be selling yourself to these potential investors. Unfortunately, while entrepreneurs may be confident in their ability to run the business, they may not be as confident in communicating the value to potential investors. Here are some critical mistakes to avoid when communicating with potential investors.
Don’t Talk Too Much
Investors hear pitches from entrepreneurs just like you every day. In many cases, that’s all it amounts to — talk. When you’re communicating to potential investors, one thing you want to avoid is talking too much. The key is communicating your message efficiently and succinctly, so the investor knows what you’re pitching and what’s in it for them.
In your initial pitch to investors, it’s unnecessary to go into fine, granular detail about every aspect of your business. Instead, focus on the big-picture objectives and point out how you plan to get there. Provide detail, of course, but don’t talk yourself out of a deal by not knowing when to stop talking.
Don’t Be Inconsistent
Most successful companies have a basic tenet that drives every aspect of their business. In many cases, this becomes part of the company’s mission statement, and everything they do can be connected back to that statement in one form or another. You should take this similar approach when communicating with potential investors. Always stay consistent with your messaging. If investors identify even minor inconsistencies with what you say or do, they’re likely to see red flags, even if they don’t exist.
Don’t Bore Them
Information is essential, but too much information isn’t good — especially if it’s drab numbers presented in a boring way. A pitch to potential investors shouldn’t be a show you’re putting on, but it shouldn’t be a boring 30-minute PowerPoint presentation. Vinod Ramchandra Jadhav emphasizes that you need to communicate your message effectively, which requires you to keep your audience’s attention.
Don’t Be Ill-Prepared
Remember that communication is a two-way street. You should expect them to ask you questions when pitching to investors. If you’re not prepared for what they might throw your way, you could look like you don’t know what you’re talking about.
It’s OK not to have the answer to every question they ask. However, if this happens, don’t make something up on the fly. Instead, acknowledge that the question they’ve asked is a good one and that you’ll have to get back to them with the correct information.
Investors are more likely to respect you if you handle their questions that way.
Don’t Limit Yourself
Reeling in potential investors is a lot like making a sale. You’re likely going to have to cast a wide net and market your services to many people to close the right deals. Vinod Ramchandra Jadhav says that one big mistake that entrepreneurs make is that they only communicate with a select group of potential investors.
They research investors they’d like to team with, then hone in on those investors, ignoring other possible suitable matches. Don’t limit yourself this way before you even talk to anyone. Instead, cast that wide net just in case your intended target isn’t interested.