Raising investment for your business can be challenging. Knowing how to properly ask someone to invest requires understanding their motivations and presenting your business professionally. This article provides key considerations and sample interview questions for asking someone to invest in your startup or small business. Proper investment pitching involves understanding the investor’s goals, having a strong business plan, and preparing to answer tough questions.
Understand the investor’s motivation for investing
The first key when asking for investment is understanding why the investor would want to invest in your business. Typical investor motivations include seeking high returns, supporting socially responsible businesses, or investing in sectors they care about. Research the investor beforehand to understand their goals. This allows you to tailor your pitch and highlight the ways your business matches their interests.
Have a solid business plan ready
No investor will put money into a business without seeing a strong business plan first. Your plan should include financial projections, a market analysis, details about your product/service, and information on your team. Bring both a printout and digital copy of your pitch deck. Be ready to share more detailed financial documents if requested. A solid plan shows you have done your homework and know how to execute.
Prepare for tough questions on financials, team, and risks
Investment interviews often feel like interrogations, with hard-hitting questions about everything from your financial assumptions to your management team. Expect questions on your financial projections, target market, competitive risks, and contingency plans. Be ready to defend your numbers in detail. Also prepare for personal questions on your team – investors want to believe in the founders as much as the idea.
Ask for a specific investment amount and use of funds
Don’t just ask an investor for a generic ‘investment’ in your business. Come prepared with a specific amount you want to raise and clear plans for how you will use the funds. Outline what the investment will be used for – e.g. hiring developers, purchasing equipment, acquiring office space. Investors want to see you have a solid plan ready for their capital injection.
Be open to different investment types besides equity
Equity investment where the investor takes an ownership stake is common, but not the only option. Many investors may prefer debt financing through loans and bonds. This provides set returns without diluting your ownership. Investors may also propose investment via convertible notes. Keep an open mind to non-equity approaches if they meet your needs.
Asking investors to back your business takes preparation and understanding their motivations. Develop a solid plan, tailor your pitch, and be ready for tough questions. With the right approach, you can secure the investment your business needs to grow.