That’s where all the stories begin. Having an idea or a project and running a business out of it requires money. Most of the people don’t have money to bring this idea into reality and the best options will be left is to ask for it. Here it comes investors. In this article, we are going to talk about the negotiation with an investors and types of investors (as I call them Business Angels).
Some advice to negotiate with investors are:
- Listening actively, meet the needs or concerns of the investor to know how to respond, how to get the financing needed in the best conditions.
- Ask, do not be afraid to do so.
- Assertiveness handle well.
- Much better reach investors with knowledge in the field and matter because they know what the project is and can even provide contacts and others.
- It is better to have more potential investors in order to have more bargaining power.
- Clearly define the objectives: what is to be achieved, in what time and what is needed from the investor.
- Make a good presentation, detailing the maximum what you will do, create a business plan and don’t hide anything from investors. It is important everything possible so that the investor can make better decision.
- Be patient. Negotiating with private investors can be complex and long, sometimes it takes a while, so it’s useful to know and take advantage of the expected wait for itself.
- Seek advice if needed or not all the terms are well known. Having a good lawyer can be key in cases where these are not small businesses.
- Always leave all agreements in writing.
- Read carefully before signing anything and check that they agree to each and every one of the terms of the agreement.
- Remember that some investors don’t care about your project. They just want to make money from their money.
- Some investors are serious enough. If you project is interesting they might even offer a collaboration with it. Get ready to propose only good offers.
- They are in business for long enough and they know how difficult to earn money so here it comes an iron heart to break.
- Again, your business plan and plan of returning money by time, is the only key for you to have an investor and the key for investor to trust you.
Raising capital is one of the most challenging tasks for entrepreneurs. It is, in fact, a step that can paralyze the implementation of the new company. To overcome this process, know how to face meeting with a ‘business angel’.
You are an entrepreneur who needs funding for the implementation of your business. The current situation does not bode well for a while access to credit, so it has several meetings with private investors. Your goal is to get part of the capital to launch the company and it must convince him that his future enterprise is viable, has a future. In short, it is a good deal.
Face to face with the investor, how to get the best deal for both sides? Antonio Manzanera explains in his book of Finance for entrepreneurs (Editorial Deusto) key negotiating with investors: “The good negotiator is the best questions ago, and knows how to listen and interpret the answers.”
For example, if an investor that had a bad experience with a promoter computer on which the partners were not involved, it may be because it is to interpret the fundamental matter and that is not negotiable.
The first interview
This meeting served to present the project as an investment opportunity. The author states that the key to this first interview are the last 30 minutes. At that time there is usually a dialogue with the investor that it will draw all the necessary data. According Manzanera, there are two aspects that can not go unanswered in this conversation:
1. The entrepreneur explains his vision of the business. Must be honest, clear and convey sincerity that intends to create and their future plans. Adjust the speech what exactly does the fund does not usually cause long-term outcome.
2. The role. An investor wants to know who will manage the company, how it will do and what experience you have in this regard.
In the first interview begins trading: both the project and who presents are fundamental to the investor.
“One of the keys to achieving these goals is to face meeting with a collaborative approach. This is the best recipe for eliminating information asymmetries, to align the interests and to reach a good agreement on investment, “concludes the author of finance for entrepreneurs .
Types of investors as the risk assumed
There are various types of investors according to the criteria that are taken into account, and the risk to take is certainly one of the factors which may be taken into account when determining what type of investor you choose.
The investors as the risk they are willing to take are:
- Conservative. Those who want to invest in insurance products, but give a lower yield. They tend to buy and hold long-term investment products with low risk.
- Moderate. They are those who can take more risk than conservatives, so it can invest part of their portfolio in markets or assets with a certain risk, but not all deposited their money into high risk.
- Aggressive. They are those who spend most of their portfolio assets with high risk for a higher return on their money, investing in short-term operations and high profitability. They are not afraid to take risks or to incorporate new investments to your portfolio.
Conservative investors who are still willing to leverage their money, not much risk and receive fewer benefits in their investments, although those with more guaranteed profits too. The most aggressive are, in turn, those who do not mind risking money and daring with new products, getting more value for their money but they also get to lose. Moderates are halfway between them, and may even change its investment strategy as they see fit.
Let’s go through the videos to understand more on this regard or add up some additional information for your benefit.