Got a killer business idea but no cash to get it off the ground? Or perhaps you’ve grown as fast and far as you can with your initial capital and now it’s time to talk shop with potential backers?
Unless you doorstop your target or have a lucky encounter in a lift, it’s likely your first approach to investors will be in writing. A well-crafted letter or email can mean the difference between piquing their interest and having your proposal consigned to the circular file.
So what is the key to making a good first impression on paper? Right Click Capital founder Benjamin Chong shares a few pointers.
Do your homework
If you fire off a few messages without bothering to check whether the folk you’re targeting have a track record, or interest, in investing in your industry, don’t expect to hear back.
Chong says most investors focus on specific sectors and you’re wasting their time and your own if you don’t bother finding out what those are before you make an approach.
Most investors focus on specific sectors and you’re wasting their time and your own if you don’t bother finding out what those are before you make an approach.
Being able to express why an outsider would want to put their hard-earned cash into your business is key when you’re putting pen to paper to engage with investors.
“Good founders who’ve thought about their business for a long time and actually spoken to their customers about their product, even if they haven’t built it yet, have an ability to explain their product or service in a clear and concise fashion,” Chong says.
“That means people like us can read it and go, ‘yeah, I understand that, I want to have a conversation with them’. Being concise is very helpful because it allows us to review things quickly and rule things in or rule things out.”
Sure, your concept is the best thing since sliced bread but resist the urge to gush if you know what’s good for you.
Revolution – or just too much spin?
Sure, your concept is the best thing since sliced bread but resist the urge to gush if you know what’s good for you – investors are unlikely to share your unqualified enthusiasm off the bat and may find it irritating.
“Superlatives don’t really work for me,” Chong says. “They might work when you’re marketing your product but when you’re talking to investors, don’t say things like ‘it’s revolutionary’ or ‘it’s the world’s best’. If I counted the number of revolutions I’ve supposedly experienced, I’d be in a washing machine.” And as for buzzwords? Just don’t, OK?
Don’t forget to Spellcheck
Poorly constructed or error-ridden emails will make you and your enterprise look third rate, no matter how extraordinary your offering is. Chong advises if spelling and grammar aren’t your strong suit then phone a friend and have them check your draft before you dispatch it.
Sylvia Pennington is a Brisbane-based freelance journalist who writes about small business, information technology and personal finance.