When starting a technology company, it is common for business owners to obtain investment funding from either venture capitalists or angel investors. This task isn’t an easy one though. Getting an investment is competitive, so to help you out, here are five important tips for obtaining investor funding.
Tip #1 – Master the Pitch Deck
The Pitch Deck might be the most important part of getting an investment for your company. It is a short presentation that contains about 10 to 12 slides, with minimal information on each slide. It’s not a life-story or a book; it’s just a brief presentation describing who you are, what your product is, how you intend to make money, and what type of investment you are seeking. It shouldn’t take long to actually present the entire pitch deck, yet the information must be clear and dense. Do not waste a single word. Common slides in a pitch deck include: an introduction to who you are, the team involved in the project, the problem that exists in the market, competitive advantages you have, your unique solution to the problem, a description of the product, a market analysis, and a description of the competition. Perhaps most importantly, you must also describe your business model and how much money you want, along with how you plan to use it.
Tip #2 – Present Your Technology
It is preferable to investors that your technology company has a Minimum Viable Product to demonstrate. This means that you have the actual software or hardware ready to show the investors and are able to present its capabilities. It certainly isn’t impossible to obtain investor funding with just a technology idea, but you are more likely to close the deal if you can show what you have built at the current time. In fact, it is much wiser to attempt to obtain funding after you have some sort of product built, whether it has customers or not. Showing that you have put in the hours to create a new idea and that it is a real, working idea is far more impressive to investors that just an idea on paper. The suggestion is that you put in the time to build something and hone your idea before asking outsiders for money.
Tip #3 – Be Precise About Your Tech Platforms
Technology investors are very savvy about the technology world, as they should be. You must be very clear to them what types of platforms you intend to work on and with. For example, if you have a mobile app idea, the investors may ask you whether you plan to roll out the app on the Apple platform, Android platform, others, or any combination of these. If you aren’t clear on how you plan to deploy your technology and in what timeframes, the investors may lose confidence in you. Assume you are building a software as a service product. That product requires use of a cloud-based provider. Knowing which provider you intend to use and why should be a key part of your presentation to investors. You must be clear about platforms and timelines before you walk into the investor pitch. Every detail of how you plan to bring your product to market is important.
Tip #4 – Build the Best Team
When building a technology startup, the team is very important. Investors are likely to give you money only if you have the appropriate team in place to make the business idea a reality. Sure, you might not have everyone you need right now, and it is acceptable to mention this to investors, but do your best to create the perfect team before pitching investors. For a technology startup, you need someone in charge of all of the programming that goes into the product, but you also need a design person, a marketing and sales person, a finance-focused person, and an overall business development person. These roles rarely can be covered by one founder alone. Typically, two or more founders are involved to make sure all of these critical areas are covered. Again, it may be very clear that you are missing one of these key elements and that some of the investors funding may be used to hire a professional to close some of these business gaps. This is entirely acceptable. Just be clear on defining your team and whoever else is involved in the business.
Tip #5 – Never Cold Call Investors
This tip is simple, but it is very important. You should never cold call or cold email investors or investment firms. Technology investors have so many deals on their plates, and their calendars are usually filled with pitches. Typically, contacting them cold is seen as a negative (and maybe even desperate) sign. Warm leads from people in the technology world are definitely acceptable since the investors trust their networks’ recommendation. Even better is when you build a product that garners so much attention that the investors seek you out. Overall, getting venture capital funding can be a challenge. You can be in a better position to succeed once you have a solidly written pitch deck and a basic version of the technology to demonstrate. When you employ this along with the other tips mentioned above, you are far more likely to get the attention of an investor and get the funding you desire than someone else who walks into an investor meeting less prepared.