October 18, 2017

Communicating to attract investors at every stage of growth


Searching for the right investors takes time and patience.  Having a clear idea of who you want as an investor, and learning how to target them, can be intimidating. The most successful company founders search for investors who bring with them more than just investment.  They are seeking a strategic investor who can also advise them on business decisions, assess their strengths and deficiencies, and deepen connections with key stakeholders. But how should you be communicating your investment case to attract more capital?

Before reaching out to investors, it is important to think like an investor. It’s vital that you communicate your core strengths in your communications and make clear your points of differentiation. With investors you need to be visible and articulating a narrative that is appealing and consistent. What they will want to see is that your business is profitable, scalable and predictable. You need emphasize these strengths in your communications.

1. Do your research & communicate with the right people
The first thing you need to do before communicating is get to know your target audience  – who is on your target list, what types of companies do they tend to invest in, how involved are they in these companies, who are their circles of influence and can they introduce you to other potential stakeholders? Investors do not tend to invest in sectors they do not understand – you may be well prepared, but an investor will not inject funds if he or she does not know the sector at least as well as you do.

Being able to answer such questions will help you narrow down who you target.  It is not a one-size-fits-all approach.  Every investor has different priorities in building their portfolio and they way to impact them will require different communications strategies and channels. However, aim to detect trends among your target investors and convey these in your key messages.

2. Know your company inside and out
This may sound absurd – of course, you know your company or product, you built it.

Now, take a step away from your company and look at it through the eyes of someone you may want as your investor. Investors want transformative ideas and companies that can help change our behavior, culture or way of thinking. Competition for investment is intense and most investors can’t afford to and won’t take their time to look at you unless you can quickly and clearly demonstrate a large expected future value. It is your job to underline this payoff when you communicate and you may have as little as 15 seconds to initially capture their attention.

You should quickly be able to answer:  What problems does this product or service solve? Who are your competitors and why is your product or service better?  You have to portray your belief and passion in the company, your market knowledge, and your drive and tenacity to take the business to the next stage of its growth.  Some investors also look for flexibility – entrepreneurs that are willing to pivot or refocus their plans and those who can be coached.

And most importantly be consistent across all of your communications. Make sure that all of your internal team are aligned on how they would respond to these questions and that these key messages are present in all of your external communications so that you are building a consistent band and reputation.

3. How well are you articulating your value proposition?
Be hard on yourself and think like an investor. Have you clearly communicated your plans of how you plan to scale the business? Can you talk about your growth plan for at least the next 5 years? Investors are hunting for value and growth so that they can ensure you are going to generate return on their capital. Make sure you evidence that the business is ready for investment and that your growth journey is mapped out clearly with clear milestones that you can report on.

4. Tell YOUR story
It’s often said that the best ideas are the simplest. Tell your story in a way that will connect with investors – don’t get too technical too early. In our digital era, the average investor is inundated with proposals and barely has the chance to screen most opportunities – so be concise.  A strong financial plan is a pre-requisite, but a great story has the potential to seal the deal. Never forget that at the end of the day, you are also under scrutiny because the investor is ultimately assessing your suitability as a partner.

Tell the story that makes your company stand out from others trying to compete for the same funds.  And never underestimate the power of anecdote and storytelling.  Stories help pique the interest of investors and can make you and your company more likeable.

Weave into your story all those features that make you not only different, but relentlessly committed and dependable.  Ultimately, underline what is in it for the investor because that’s what they care most about. Be able to demonstrate your growth, the current uptake of your product or company, and illustrate how and when you will deliver a return on their investment.

5. Know your competitors and don’t hesitate to show your exceptional team
The investors will know who your rivals are, and they may have an idea of the obstacles to your growth. Don’t underestimate the extent to which investors know your sector. Focus on what differentiates you in all of your communications and how you can effectively articulate that position within the market.  Show your knowledge of your target demographic and how you will stand the test of time.

You should also communicate your management team’s expertise and their ability to execute the business plan. It is important to highlight your team as not only experienced and reliable, but innovative and ambitious – the kind of team to drive new ideas, energize staff and realize potential. Therefore, you should concentrate on the knowledge and knowhow of your management team as well as their character. Investors will also look for signals – for example, has anyone on your team built another successful business?