How do you follow up with an investor after a pitch?
A good pitch will get you in the door, but then it’s time to produce the receipts.
Let’s say that you’ve sold the right vision to the right investor (or banker). That should get you in the door. The next step is where the devil gets into the details.
Okay, so how do you follow up with an investor after a pitch?
To raise money, it’s critical to be polished on the inside, not just the outside. Why? Because the people who make decisions about investments or loans generally have a responsibility to ensure you can back your vision up with receipts.
This is especially true if someone is investing “OPM,” meaning “other people’s money.” Angel investors can usually just do whatever they want, but they also like to see evidence of a functioning company.
What information do investors need?
Investors and bankers need to make sure that you have a properly set up, functioning business that is unlikely to suddenly close down and disappear.
They will also want proof of any claims you are making about your progress, partners, and profits.
Here’s a non-exhaustive list of what investors look for before investing:
Basic legal documents. Papers showing how you set up your legal entity, your bylaws/operating agreement, and a list of the people who are owners/investors in your business.
Contracts or letters of intent with key humans and/or strategic customers or partners.
Financial projections and/or profit and loss statements that track with your vision. Make sure you are able to explain key assumptions.
Basic information about your product and how you plan to grow sales and revenue.
Protection of intellectual property (IP): Show you have protected your inventions with patents or your brand name with a trademark. Also show you have agreements in place with contractors and/or employees that protects your company’s valuable IP.
How to convince investors to invest in your business?
A little extra polish can go a long way. Taking the extra time to present your company information and documents in an organized fashion makes more of a difference than it should.
Human brains are looking for ease, and good organization is an easy proxy for competence. Emotionally, it’s the difference between opening a messy, dusty closet versus the sparkling clean closet you just organized.
Don’t send a prospective investor or banker a file folder with a bunch of random documents inside with weird, incomprehensible file names. Take the extra half hour to present a folder with labeled, numbered subfolders that contain documents with file names that make sense.
Take a look at the folder of documents you plan to share, and imagine you are a stranger who has never seen it before. Go back in, fix file names, and group documents into categorized subfolders (legal, financial, HR, intellectual property, etc.). This makes whoever is looking at the folder’s job so much easier and increases their confidence in your ability to run a successful business.
Humans are emotional creatures - even bankers and investors! Making a good impression with your business documents is smart and can make the process of bringing funds into your company much smoother.
Take Action: Follow Up With Investors After A Pitch
To sum up, if you want to bring other people’s money into your business, you have to sell the right vision (big & fast vs. moderate & steady) and then back it up with organized receipts (legal, financial, IP).
Showing you understand business fundamentals and have your ducks in a row goes a long way toward convincing a potential funder to allocate funds to your business.
Present Your Business To Lenders And Investors
Your action items:
Review and refine your pitch
Gather and/or create documentation
Organize your documents before sharing
Share, and get feedback as you go!