Friday, November 8, 2013

Communicating With Potential Investors- What You Should Do

By Merrette Moore, Managing Partner, Lookout Capital

One of my favorite entrepreneurial community service activities, if you will, is serving as an advisor to the Cherokee Challenge.  JT Vaughn and the rest of the Cherokee team have done a tremendous job building the program into the preeminent of its kind in the area.

My major contribution to the Cherokee Challenge is leading a discussion involving communicating with potential investors.  I characterize it as such, as opposed to a presentation, because even though I come armed with a bunch of slides, the other advisors and participants in the room quickly jump into the verbal fray to offer their respective takes and war stories, which is fine with me as it gives me an opportunity to drink the awesome beer Cherokee provides.

That’s what makes the Cherokee Challenge such a worthwhile endeavor…the people (although the beer is excellent too).  Their collective experience in the entrepreneurial world is impressive and their willingness to share their hard-won knowledge is laudable.  The conviction with which they speak is undeniable and invaluable.

I give this background to the points that I’m about to make concerning communicating with potential investors because these points are solidified by the emphatic consensus of some of the areas most experienced and successful entrepreneurs and investors.  As subjective as it might seem in theory, the reality is that there are definitive "do’s" in communicating with potential investors.  Here are some for consideration:

  • Be open, honest, and transparent. Do not hide anything or seem like you’re hiding anything. Good investors will run if you do.
  • Look for a value-add investor, not merely someone who can write a check. You should look at investors as partners, not a necessary evil.
  • Accept input from prospective investors, particularly the experienced ones. A pitch can be as much a learning experience or free consulting as anything else.
  • Ask for enough money to realize at least one major, value-creating milestone. Avoid the bridge to nowhere scenario.

Communicating with investors should be a productive experience beyond merely raising money.  Done effectively, it will help the overall business and position a company for success.

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