How NOT to screw up your first investor meeting
You want to raise money for your startup. You even manage to get a meeting with a business angel or venture capitalist. But that meeting ends with a “no“. Or even worse, with a “let’s stay in touch – and keep us updated“. Congratulations: you just screwed up your meeting!
“What could I have done differently?“, is one of the most frequent questions my mentees ask me. And, to be honest, it was a question I asked myself many times, when I tried fundraising for the first time many years ago for my startup.
Most investor meetings fail because founders don’t understand how investors work and think. Knowing it enables you to adapt your meeting strategy. Here are a couple of my favorite strategies and hacks, that I have developed over the years.
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What Investors want (and need!) to hear
You have piqued the interest of the investors, and he invited you to a meeting. Now he wants to know more and validate, whether an investment in your company could be profitable.
Experienced investors focus on a few points in the first meeting, so they can quickly assess: is it worth that I spend more time on this startup after this first meeting. The check this, by validating the following points:
- What does the startup do? Who are its customers, what are their pain points, and how are they trying to solve them in a unique way. Don’t laugh! Many investors complain that founders cannot clearly and concisely explain what their startup does – or plans to do. You have to nail this!
- How large is the market? This is important to the investor because he needs to trust that your startup can grow into a large market. Only if the market you are addressing is large (and ideally also growing), your company can become real valuable. Venture investors don’t care about startups that are limited in growth potential by a small market.
- Is it scalable? Given that your startup is addressing a big market – can your business model scale to grab a big piece of that market?
- How are you going to achieve this? What is your plan of attack? Apart from the big vision – how do you plan to execute towards that big vision in the next 12-18 months. Concretely. Exactly. Know your details!
- Do I trust this team? After all, plans are just that. So, the investor needs to trust that you and your team can execute the plan, scale your business and conquer the big market. No trust. No deal.
Focus on driving home those points in the first meeting. If you miss one of those points, or cannot convince the investor on a high level that this is possible, you will be out of the race. Other topics will come up in the first meeting – but it is your (!) job to make sure you find enough time to drive home these fundamental points, that form the foundation of any venture investment. Leave the meeting without having done so, and you’re in trouble.
Your #1 goal of the first meeting: get the second meeting
Ideally, you satisfy the points mentioned above, and the investor mentally checks them off. The interest level will be high, and the investor will likely start probing deeper into additional topics. That is the ideal time to agree on a follow-up meeting. Use the positive momentum and interest, and agree that you bring all information necessary for a deep-dive, and that the investor can bring his partner or another team member for the next meeting.
This is also why you should set short first meetings. Never exceed one hour. If you cannot get your points across in less than an hour – you’re doing it wrong. If the investor is so interested that he wants to talk with you more than one hour – use that momentum to agree on the next meeting.
Because remember: you need to get into a process; a sequence of interactions. And turning a first meeting into a follow-up meeting is the first big step towards getting funded.
Strategies for your first meeting, and how you even get one, will be part of a live webinar + Q&A by Florian this week.
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