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A Brief Overview of The Investment Landscape

October 17, 2017 |

Connecting with Investors at Trade Events

With Web Summit just around the corner (November 6 to 9, 2017), startups from around the world should be asking themselves the following question:

“How do I connect with investors and optimize my chances of closing the deal?”

To alleviate a little bit of stress, we’ve put together a guide to act as a refresher on the various kinds of investors and strategies that will give your company the best chance of succeeding in the global marketplace.

 

Who’s Who and What Do They Really Do

Many companies depend on investors to grow. There are the few that Bootstrap, but to grow fast that’s rarely an option. International trade shows are an ideal opportunity to connect with people and businesses that can help you achieve your goals, while providing them with something in return. Before you go, it is crucial to identify the type of investor you need to reach.

 

Angel Investors

An “Angel” is typically an individual who has both the desire and means to help businesses (for the most part start-ups) that they believe can grow and may lack other means of financing. Angels can help in various ways, whether by offering a loan, purchasing stock, or mentoring entrepreneurs. They generally have connections that can help your company make new inroads in international markets, and may or may not desire to participate actively in the direction of your company. 

Before approaching your Angel, consider the following:

  • How much control will they expect?
  • How much control are you willing to share?
  • What is their motivation?
  • How experienced are they?
  • Does your venture meet their investment requirements?

 

Venture Capitalists

Businesses that have proven successful, found stability and are ready to take the next step in growth should consider approaching Venture Capitalists (VCs). This investor type typically has large sums allocated to help businesses that can promise them return on their investment. In order to secure their investment, they will likely need equity capital – meaning a share in your company. While this equity capital may mean sharing ownership of your company, or giving up some say in the company’s direction, it can mean up to millions of dollars in investment.

Before approaching VCs, consider the following: 

  • Do you have a solid business plan?
  • Can you, with a reasonable degree of certainty, assure a high return of profit?
  • What is their investment history?
  • Why do you believe your company is a good fit for them?
  • How much control are you willing to share?

 

Corporate Venture Capital

Corporate Venture Capital (CVC) is the investment of corporate funds directly into an external start-up company. CVC makes it possible for large companies to engage and align with emerging technologies, and can help start-ups leverage their brand, access distribution channels and markets, and engage with a large customer bases (source). A CVC investment is typically structured in one of two ways: either your company remains as a standalone limited partner, or it becomes a separate division of the corporate parent company.

 Before approaching a company for CVC investment, consider the following:

  • What does your company offer them? (e.g. access to new target audiences, opportunity to harness new disruptive technology, participation in a burgeoning market with high growth potential, etc.)
  • What does their company offer you? (e.g. strategic advice, operational support, access to customers and distribution, etc.)
  • What rights might the CVC ask for as part of its investment?

 

Planning Your Approach

No matter which investor type you’re looking to attract, it is important to learn as much about them as possible prior to approaching them.

In fact, showing initiative in engaging investors personally is one of the primary actions start up tech companies can take to maximize their odds of success. A few ways you can do that are:

 

  • Identify a mutual colleague who can give you a personal introduction.
  • Find the social platforms, groups or blogs where your investor is active, and engage with them there – keeping your posts smart, timely and professional.
  • Do your research. Learn as much as you can about the investor’s previous ventures and existing portfolio, and identify what makes your company the perfect fit. Come prepared with a business plan and projections, and do your best to anticipate the types of questions your investor will ask.
  • Keep it human! Ultimately, you’re asking investors to put their faith in you as much as in your company (or even more). Be warm, focused and let your personality and drive come through.

 

If you do your research, learn about the investors, define your expectations and have a clear plan to spell out how helping your company may benefit them in the long run, you are well on your way to a productive and positive experience.