The startup scene is a bubbling cauldron of activity. According to Earth Web, 305 million startups enter the scene every year. However, few are alive and kicking beyond the first year. Lack of funds is one of the major hurdles fueling this failure. Here are tips from top that can help you reel in investors and get the best deals.
Know what you want
Before you pitch potential investors, be crystal clear about what you’re looking for. Do you prefer equity or debt financing? Will a cash infusion work for you, or does your business need more help through incubation?
Each of these requests calls for different strategies and obligations. For example, if you’re going for an equity deal, be prepared to give away some control of your business. If you’re leaning towards debt, you’ll be stuck with interest payments.
So, take time to understand what type of deal makes sense for you.
Don’t chase every investor
Not all investors are created equal. Even if they’re swimming in cash, they can all have wildly different motives. Chase only those who can add value to your project.
Negotiation startup courses recommend researching an investor’s interests and preferences before you commit to a meeting. Dig into their past deals and track record. What kind of deals do they prefer, and what do they expect in return?
Do a dry run
Persuading potential investors can be a daunting task. Wayward nerves can cause you to crash and burn during your presentation. Since the stakes are high, take time to go over your pitch before presenting it to investors.
Practice your pitch in front of trusted friends, family, and mentors. A dry run is a great way to weed out the weak spots in your approach. Additionally, it can help you tweak the content to better appeal to investors. However, be wary about who you rehearse with to protect your ideas.
Also, remember that the goal of a dry run is not to sound overly rehearsed. Rather, you want to sound confident and knowledgeable.
Be prepared to walk away
If your startup is on the brink of collapse, you may be tempted to jump at any opportunity. However, try hard not to let desperation lead the charge. When you let desperation drive, it’s easy to get bullied into a poor deal.
A bad deal, no matter how craftily bargained, will only land you in a bigger mess. To avoid this slippery slope, negotiation courses advise setting boundaries before the meeting. It’s okay to be flexible, but don’t forget what you’re worth.
The decision to negotiate with investors is no light matter. It requires careful consideration and prep on your part. Follow the tips outlined in this article, and you’ll stand a stronger chance of locking in a favorable deal that helps grow your business.
