To begin, the investor must be described as the individual who distributes and invests capital with the anticipation of a future return and financial reward.
Entrepreneurial ventures progress through multiple stages, beginning with the idea and testing it, then testing the solution and its relevance to the problem, and finally reaching the stage of project extension and growth after attaining an adequate business model.
Capital is required to assist the company with recruitment, product development, and other activities in order for it to continue and achieve the goals connected with each of these stages. As a result, looking for investors is a natural and necessary step that many entrepreneurial enterprises take.
In this essay, I will share with you some crucial ideas to consider before presenting your entrepreneurial proposal to an investor (or at any event or competition).
It is natural and universally acknowledged that the process of searching for an investor requires communication and presenting the project in front of dozens of investors in most cases; I hope that you will follow the tips that I share with you and discuss these basic matters during your project presentation, which will contribute to increasing your chances of success in obtaining investment, God willing.
14 Tips for presenting your project to the investor
Investing in the early phases is frequently in the individual before the idea since many investors in entrepreneurial companies understand that a great team with a lousy idea is far superior to a fantastic idea with a regular or bad team. A great team will master the implementation of the same idea or will pivot to another idea that may be more valuable.
When the concept owner or presenter talks about or presents the idea at an event (such as demo days) or in a closed meeting with the investor, the presence or absence of passion for the idea is typically obvious. So, express your passion and enthusiasm when discussing the idea, why the idea (or problem) popped into your head, and how you intend to discover a creative solution to it.
2. Seriousness and persistence
In addition to your passion, the investor wants to see if you (or your team) are persistent enough to see the project through to completion. Were there any issues with implementation? Did you try to start implementing the idea, even if in modest increments, or are you trapped in the idea stage and waiting for investment or financial support?
By presenting some of their concepts without describing the practical procedures, they began to convey to the investor that the team lacks seriousness and that he relies heavily on the investor and the funding he will receive to address all of his problems!
To provide an example, I’ve seen people present a technical concept, such as a mobile app or a web app, in front of an investor with no vision or depiction of the idea, even in the form of a drawing on paper! While it is easy to find tools and services to help with planning and visualization, the fact that the presentation lacks such fundamentals shows that the team is not serious.
3. obvious problem
It is critical for the investor to have a clear problem that the entrepreneur aims to answer so that the solution that the entrepreneur wishes to work on has actual value.
When there are facts, statistics, or data that demonstrate the problem, its impact, and the need to find a solution, it all helps to emphasize the importance of the notion.
4. A clear understanding of the idea and the market
When looking for an investor for an idea or a pioneering project, you must at the very least demonstrate that you have a sufficient understanding of the problem, the market you intend to enter, and the most important local and worldwide competitors.
Being enthusiastic about an idea implies a genuine desire to see it realized. As a result, we can claim that you have enough understanding and perception to say that you are better than 80% of the people around you in your comprehension of the idea, the field of work, and everything else linked to the idea that you intend to work on.
Dear reader, you cannot imagine that the owner of the idea has only a rudimentary understanding of some of the fundamentals of his field of work and the field of the idea that he intends to implement, to the point where others, other than the public or the audience, have a clearer and more comprehensive vision!
This is a problematic indicator since it indicates that the individual is not serious about studying and research and has not performed the duties required to make their idea successful!
5. Creativity in idea and solution
I am one of those who feel that researching and connecting several things or ideas can lead to the creation of something new and different from what already exists. Is the idea novel or the result of integrating several ideas to create a better visualization?
It is critical for the investor to understand whether there is creativity in the idea to distinguish it from other ideas, or whether there is a clear development in the business model or some of its aspects to assure the project’s uniqueness and quality in implementing this idea on the ground.
6. Difficulty implementing the idea
Personally, I always advise people to avoid concepts that are simple to replicate and adapt.
One of the factors that the investor is interested in is how easy/difficult it is for others to adopt the idea. Ideas that are easily replicated and applied by others are tough to hold onto for an extended period of time.
As a result, finding a competitive advantage that distinguishes the project from others becomes tough. On the other hand, the fact that the implementation of the idea necessitates rare experiences and capabilities makes the implementation of the idea by others more difficult, or at the very least allows the founders sometime after the product is launched to develop and work on it without worrying about the presence of someone who can replicate the idea.
7. Industry experience/excellence: What sets you apart?
It is critical that the team or one of its members has experience and understanding in the field of work of the project!
And, assuming that they are not specialists in the field of the idea, but have a passion for it, it must be clear to the investors that the team’s efforts to enter the field and become acquainted with its foundations and merits from experts, books, research, and other methods, to demonstrate the existence of a sufficient understanding that enables them to implement the idea or at the very least to carry out the initial experiments or to produce the solution in a timely manner.
8. Project management ability
Despite the value of experience and excellence in the field of the idea, it is insufficient on its own, as there is a need for someone to oversee the work and maintain its continuity toward the objective. Whether the project management will be handled by the same founder who has the experience or by a co-founder who will handle this part, must be stated clearly in the presentation.
9. Integrated team
It is usual for the team to have complementary abilities to aid in the implementation of the idea, with at least one team member available in the early stages of the project (there are exceptions too).
If the project founder is working alone at this level, he must clarify his talents and capabilities, how they are sufficient at this stage of the project, and what he will do in the future to cover other areas of the project that he does not have the ability to handle.
Many investors would undoubtedly prefer to have a team behind the idea, but the process of building work teams, particularly in technical ventures, is challenging in the Arab world due to a lack of events and platforms that help to connect persons interested in various sectors.
10. Clear Business Model
While it is not expected that the business model will be ready and accurate from the start because this is impossible in a start-up, the entrepreneur must make it clear that he has thought long and hard about the business model and benefited from similar experiences (if any) in arriving at a business model (among several models) that he hopes to test and how the testing mechanism will work.
11. Communicate with target customers
Despite the widespread adoption of important modern entrepreneurship methodologies and tools such as Lean Startup and the business model, and their emphasis on the importance of understanding customers, and in light of the repeated use of phrases such as “Get Out of the Building” to emphasize the importance of not thinking, planning, and working away from customers, understanding them, and interacting with them, we still see many idea owners who did not bother identifying a clear inflection point.
If the owner of the idea did not communicate with the clients until the stage of his presentation of the idea to the project, this has several negative connotations, including the fact that he did not bother himself to read about the methodologies and foundations of entrepreneurship to test his idea and reduce the risk in it and start at least trying to implement the idea after understanding and knowing those foundations and benefiting from the experiences of those who came before him.
12. Initial trials and minimum viable product and minimization of risk
Entrepreneurial ventures are fraught with uncertainty because some components of the business model differ from past projects, implying that this type of innovative endeavor is fraught with danger.
The route is not clear, and the entrepreneur must investigate it and its features through a series of experiments that he can conduct to learn the way and take tiny moves forward, leveraging what he learns from these experiences and the interaction of target customers with such experiences.
I frequently see great creative ideas that are not accompanied by even simple mini-experiments that demonstrate their feasibility or, at the very least, demonstrate the entrepreneur’s understanding of the importance of exploring the way by building such mini-experiments or models of the product in its initial form (Minimum Viable Products ).
I recognize that such mini-experiments cannot be employed for complex inventions (such as medical advancements), they are deemed necessary in technological undertakings.We observe that investors are often hesitant to choose a project because of the significant risk in entrepreneurial enterprises and that you do the early tests and experiments, collect figures, and verify the practicality of the idea, even if initially.
This signifies that the project’s risk has been decreased, even if only by a small proportion when compared to other investment alternatives that they may examine.
And I can assure the entrepreneur that if he conducted an experiment or preliminary experiments with the shelves that confirmed the feasibility of the idea (albeit to a limited extent), he has distinguished himself and his project from 80 percent, if not 90 percent, of the other projects submitted for investment with the same investor.
13. Required investment and for what?
Many people with ideas make mistakes in analyzing and calculating the costs that the team requires at this point of the project, either because they are ignorant or are unaware that asking for more than they require may result in the loss of a larger percentage of their ownership in the company. A new company goes through numerous stages, each with its own set of goals.
One of the primary areas of interest for the investor is knowing the amount of investment required, what will be spent, when, and how to ensure that the investment satisfies the demands of the pilot project at this level and ensures that the project moves to the next step.
In addition to the foregoing, it is self-evident that the company’s (or entrepreneurial project’s) estimate is fair, particularly if it is in its early phases, such as the idea stage. It is irrational, for example, for the owner of the concept to ask for 3 million riyals as an investment in exchange for 10%, and he has not yet begun, as if he perceives the value of his firm, which has not yet begun, as 30 million riyals!
It is disheartening to watch folks with ideas who are unsure what to do once they have received the money. Furthermore, we discover that some of them are utterly unaware of the dangers of demanding an investment greater than the project’s requirements, which will almost surely result in the abandonment of a larger percentage of the company.
As a result, this will have a significant impact on their capacity to attract additional funding through the following investment rounds that the project may require in the future. This issue could occur for two reasons:
1. Encourage the investor while being unaware that it is damaging to the project’s viability (or his knowledge of this but his indifference). Such behavior is frequently triggered by the investor’s naivety and lack of experience with risky investments and entrepreneurial ventures.
2. The entrepreneur’s lack of understanding of funding methods, dealing with investors, evaluating his project, present demands, and planning for the future.
14. Return on Investment
Despite the fact that entrepreneurship is a relatively new phenomenon in the Arab world, and despite the few acquisitions that have occurred and are occurring in general, one of the investor’s primary concerns remains the possibility of achieving large financial returns from the entrepreneurial project through acquisitions or listing the company in the market (such as the parallel market in Saudi Arabia).
Finally, the investor wants to get the most out of the investments he makes, so the entrepreneur should outline his plans for the company’s development and expansion, as well as potential acquisition prospects in the future.