Editor’s note: “The Angel Connection” is a new feature in WRAL Local Tech Wire. LTW asked consultant Bill Warner to share with readers advice for entrepreneurs seeking investment. He is chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast. The Angel Connection is published weekly.
RESEARCH TRIANGLE PARK – Once you have given your elevator pitch and you have gained interest from a potential investor, the flood gates have been opened for a barrage of questions that you really have to be prepared to answer.
You really have to know your business completely.
Speak About “The Business”
A business associate of mine, upon seeing a business plan presentation that was full of techno-babble, said to me, “Well, there’s another science project.” Angel investors want to know about your entire business, one component of which is the product or service itself. You need to be able to explain your market, the buyer whose need your are satisfying, how you will beat the competition, your marketing and sales strategy, the financial dynamics, your management team and your investment opportunity. Know all these major subjects cold and have credible and clear explanations of each. These are all business subjects that help a potential investor understand how your company is going to make money, increase the value of your company and reach a viable exit in the future so they can make money too.
Have “Business Answers”
You must be ready to answer hundreds of different questions about that will cover the full breadth and depth of your business strategy and plan. Investors will take you far and wide by asking questions about your market and competition, and deep into how you are going to win in the marketplace. They will take you deep into how you are really going to get customer awareness and sales traction. They will want to know what the deal is for the investor which will take you deep into your financial dynamics. You will be tested hard on the make-up of your management team. You certainly will get grilled on technology and services, but you really need to know everything else about your business as well.
Verify Your Answers
When engaging an investor, you need to speak as a business person. That is, your answers have to have the content and emphasis that another business person wants to hear. Once you believe that you know the answers to the potential questions you will get, practice them with a trusted business associate who has had some experience in speaking to investors. This will help you shape and tune your answers in a way that an investor will quickly understand and appreciate. As with anything, practice, practice and practice again. If you would like a starter set of questions you better be able to answer, contact me and I will send them to you.
I have already emphasized the importance of your elevator pitch. It is even more important that you understand all aspects of your business and be able to answer probing questions. Don’t even give your elevator pitch until you are ready to handle the questions that will follow.
About the author: Bill Warner is the Managing Partner of Paladin and Associates, a business consulting firm in the Research Triangle Park area of central North Carolina, and is the Chairman of the Triangle Accredited Capital Forum, an angel investor network with over one hundred members throughout the southeast.