Every company needs financing to start working and grow, and this financing usually comes from the founder or through a commercial loan, but for some companies, reaching the next stage may require obtaining financing from an investor, but this involves many challenges, starting with finding the right investor Persuading him to invest in the project.
But the biggest challenge any entrepreneur may face is securing a good deal that will bring the company to success in the future. Regardless of the type of investor, whether it is a venture or angel investor, the entrepreneur will need to pick the good deals, and avoid the bad deals.
Who is a commercial investor and how can he be found?
– The commercial investor is the person who provides capital to the entrepreneur, and the company is expected to achieve financial returns, and the investor can be a person, a company, or a “mutual investment fund”.
– If the entrepreneur does not know a commercial investor, it may be difficult for him to know where to start. In general, there are several steps that can help entrepreneurs find the ideal investor for their company, which are:
Determine what the ideal investor looks like
Before the entrepreneur begins looking for an angel investor, a venture capitalist, or any other type of investor, he must determine the type of investor he needs.
– The investor is a partner before he is a source of financing the project, and then the right person must be chosen, and the ideal investor for the company.
– Then the offer can be made only to those who are interested in the type and location of the company, and the amount of money the entrepreneur is trying to raise.
– Building a network of relationships to find potential investors
– In order for the entrepreneur to identify suitable investors for his personality and company, he must begin to form a network of relationships and this can be achieved by joining commercial organizations or business associations, in addition to participating in trade fairs, or sending an executive summary to the group of investors identified by the entrepreneur as Suitable investors for his company.
Specifying this helps narrow the search to a limited number of commercial investors, and makes it much easier to reach your target investors.
– be persistent
Even if the entrepreneur does not find the right investor at first, it is important to be persistent, because once he finds the right investors he will have a chance to secure funding.
How to secure an investment deal
Once the entrepreneur determines the type of investors suitable for his work, he must move to the next stage, which is to secure an investment deal, through several steps:
Prepare a clear presentation
The first step in getting an investment deal is to make a compelling presentation. An effective presentation includes many elements, including being short and concise and presenting the idea briefly and clearly at the same time, and providing numbers that support the idea. Investors hear a lot of talk from entrepreneurs, The idea they hear should be unique, to catch their attention among the rest.
Provide realistic forecasts and figures
It is not enough for the entrepreneur to promote his idea in general terms. Rather, he must provide realistic expectations and numbers that encourage any investor to invest in his company. No investor will agree to pay money in a company without having a clear roadmap showing him how and when he will get a return on his investments.
Learning from every step
An entrepreneur may have to meet and talk to many investors, and it may take a long time before someone offers him an investment deal, so it is important that he be persistent, trying his best to analyze the good and the bad after each presentation, and use the analysis to improve Offer, and continue to communicate with potential investors.
What makes a good investment deal?
Although it is possible to get an investment deal after all the previous steps, not all deals are good, and a good deal can be distinguished by:
Avoid giving up the majority stake
An investor may provide the entrepreneur with enough financing to pay full-time employees, but if this occurs at the cost of ceding a majority stake in the company, the deal may need to be reconsidered.
Although money is important to any company, what matters in the end is the entrepreneur’s share in the company. When an investor chooses to finance any company, he buys shares in it.
For small business owners, maintaining control of the company is a top priority, so a good investment offer is one that leaves the entrepreneur the possibility of holding a lot of stock.
Fair and reasonable terms
– It is important that the owners of companies also pay attention to the investment terms, and make sure that they are fair and reasonable, and that they are in the interest of the employees, and the terms of how to distribute profits in the event of the sale of the company must be reviewed.
Honesty, transparency and integrity of legal procedures
Securing an investment deal is not only about money, the investor is a partner before it is a source of financing.
– And then a relationship with the investor must be built based on trust and transparency, and search for investors who are honest, fair and transparent.
Fair investors want to reduce risk, and earn returns securely, by ensuring that a transaction is legally and financially secure.