by Jorge Olson, Special to California Business Journal
Once entrepreneurs lift their business from the ground, the subsequent phase involves seeking funding. For those navigating the labyrinth of fundraising for the first time, the prospect of arranging numerous pitch meetings until finding the right backers can be daunting. Yet, drawing investors to your fledgling enterprise is not the formidable task it appears to be.
Prior to commencing your pitch to investors, it’s imperative to showcase something of value. One effective tactic is to create prototypes or samples of your product. In cases where samples or funds for samples are unavailable, presenting an image or prototype can suffice. This allows potential investors to envisage the tangible outcomes of their investment. Moreover, while a comprehensive 50-page business plan isn’t necessary, having a concise slide deck is essential.
The optimal strategy for entrepreneurs preparing for a pitch is to distill their presentation into 10 slides. While some may argue that 10 slides are insufficient to convey all aspects of a business, this assertion is largely unfounded. Considering that investors encounter hundreds, if not thousands, of pitches annually, demonstrating proficiency and clarity can significantly enhance your chances of securing funding.
However, it’s advisable not to utilize slides during the investor meeting itself; rather, they should serve as a precursor to securing the meeting. During the meeting, the primary objective is to elucidate your business model and solicit funding. Subsequently, providing the investors with a concise 10-page investment business plan upon departure can serve as a lasting impression and facilitate discussions with colleagues and other potential stakeholders.
Here are three key tips and strategies for attracting investors:
- Focusing on Smaller Investors: Many novice entrepreneurs squander their time by exclusively targeting angel investors and venture capitalists. While these entities boast substantial financial resources on paper, they tend to allocate large investments to a select few projects. Consequently, it’s crucial for entrepreneurs to avoid being bogged down by excessive demands for documentation. Instead, leveraging a broader base of lower-dollar investors can be more advantageous. By soliciting smaller contributions from a larger pool of investors such as doctors, lawyers, and local business owners, entrepreneurs can collectively amass the necessary funding. Moreover, these smaller investors often harbor a long-term perspective and are less susceptible to market fluctuations, thereby providing a stable source of funding.
- Nurturing Investor Relationships: Effective communication with investors is paramount, and adherence to Securities and Exchange Commission (SEC) regulations is essential. Utilizing mediums such as phone calls and traditional mail can foster a more personal connection compared to email correspondence. Additionally, maintaining a consistent stream of updates and engaging investors through social media platforms can bolster investor confidence and interest in the business. Leveraging the support of investors as brand advocates can further amplify the company’s visibility and attract additional funding.
- Overcoming Entrepreneurial Challenges: Despite encountering various obstacles, including market hostility and economic uncertainties, entrepreneurs can navigate these challenges by demonstrating resilience and adaptability. By remaining steadfast in their vision and adjusting their strategies accordingly, entrepreneurs can surmount these hurdles and propel their businesses forward. Ultimately, securing investment should be viewed as an exciting opportunity rather than a daunting endeavor.
— Jorge Olson, Co-Founder and CMO of Hempacco, is at the forefront of disrupting the tobacco industry through innovative R&D and manufacturing processes, with a focus on herb and hemp cigarettes.
This article was written by Jorge Olson, Special to California Business Journal
