By Paul Lewis

Do’s and Don’ts when meeting an investor

Okay, so your business is growing, you have a great opportunity that needs additional capital, and you have lined up a meeting with an investor.  What are the do’s and don’ts of going into that first meeting?

I cannot stress enough how important it is to be prepared.  The investor is interviewing you and if you do not know the answers the game is over.  Know everything you can about your product, the competition, the opportunity, the market.  Know exactly how much money you need and exactly what you are going to use it for.  Talk in specifics.  If you need $248,573, say so.  Do not talk in ranges.  If an investor hears, “I need between $200,000 and $300,000,” he will quickly come to the conclusion that you do not know what you need, your business is in trouble and you do not know how to turn it around.  Don’t ask the investor how much he wants to invest. 

Instead, tell him what you need.  It is perfectly fine to ask if your needs are within his range, but stick to specifics.  Also know precisely what you are willing to give in return, whether it is equity or an interest rate.  Know your terms and make them clear.  Most importantly, be 100% honest.  If you are having difficulties, tell him.  If you just lost a big account, tell him.  The investor will learn the facts before making an investment, so don’t waste his time or your time.  It is extremely important to state the facts and don’t paint a rosy picture.  Being optimistic is fine, but don’t oversell the business or the concept.  If the deal is meant to be, it will happen.  It is funny to me how many times I see a desperate business owner that is about to lose everything if they do not get funded talking as if everything is perfect.  Don’t hide anything.  The investor will know immediately if he is being “sold” to and will end the meeting. 

Do’s
1. Be prepared
2. Know exactly how much you need and what the money will be used for
3. Know exactly what you are willing to give up in return for the investment
4. Be specific
5. Be 100% honest

Don’ts
1. Don’t lie
2. Don’t be desperate
3. Don’t ask the investor how much he wants to invest
4. Don’t paint a rosy picture
5. Don’t hide anything

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