Question: I am looking for an investor for expansion of my local business. What information do they need to know before saying yes?
Answer: You need to be just as prepared in pitching the expansion of your company as you were when you were launching it. However, with experience and results that are taking you to the brink of expansion, it should be much easier. You will have to anticipate their questions, concerns and issues and be prepared to address their challenges to you achieving your projections. You can pitch to an angel, venture capital or traditional financial lender/investor. Regardless, you need to be prepared.
According to Accion, investors are fundamentally different from lenders. Lenders give you money and you have to repay it with interest over time. Investors give you money in exchange for ownership of part of your business. Understanding the investor’s rights before entering into an agreement is critical. The most important differentiator is that an investor is not seeking repayment each month in the form of loan payments. They also can be a source of advice and counsel. Investors are looking for a return on their investment. They want to put their money to work to make money. When creating your story, start with a narrative in the form of a business plan that communicates your unique idea for expansion supported by hard numbers. The narrative has to support the readiness of the business to grow. It has to demonstrate your needs, show where you will