Presenting a business opportunity usually entails at least one discussion followed up with a written document. Your potential investors will want to understand the opportunity and — unlike the popular TV show Dragons Den — will probably wish to thoroughly discuss it instead of simply bombarding you with snide questions. Your initial discussion might be a short one, and they will want to talk through the specifics if still interested after reading your business plan, or there could be one or more lengthly meetings where what you say is compared to what’s in the business plan.
Long or short, you’ll need to use that precious face-time to create a positive impression and describe the nitty-gritty of the opportunity in terms they can understand. That means telling them who buys what from whom, what the economics are, how large you envision the business growing, where you are now, what it needs to grow, and what stands in the way of its success.
Of course, investors have to like your industry as well. The industry must be, or become, structurally attractive. Your market must be either large enough or growing rapidly enough that your goals are feasible. Some investors like to bet on new markets since they feel it is easier to obtain a share of a growing market than switch customers away from established competitors in an established market.
All opportunites have both potential and vulnerabilities. The natural inclination is to puff up the potential. Don’t whitewash the vulnerabilities — acknowledge them and demonstrate that you understand how to take advantage of your strengths and shore up the weaknesses.
Of course, investors want to be confident that they will get their money back with a return. A “give-us-your-money-and-we’ll-pay-you-back-someday” approach doesn’t work too well, so be clear on what the terms are and how your venture will create a positive return. If you want a loan, demonstrate that your venture will be able to make the payments.
THE BOTTOM LINE: Present investors with your business model — not just your product — so that they can understand how you will be able to pay back their investment with a return.