In a recent article for Entrepreneur, Richard Maclean, Managing Partner at Frontier Capital, explains the 5 absolutely wrong answers when pitching investors for capital.

Deciding to raise capital requires a solid understanding of what investors look for. At his firm, Maclean has experienced many wrong answers that automatically indicate that the team does not have the necessary understanding. Here are his examples:

•      Market Size

If you don’t know your market then you will not be able to demonstrate the full opportunity to the investor. Thorough research will give you the ability to communicate, not only the size of the opportunity, but also what differentiates your company from competitors. Maclean suggests building a market map that compares you with competitors in terms of strengths and weaknesses, as well as discussing the sales cycle, who the decision makers are, and how decisions are made.

•      Our team is awesome. We don’t need anyone else to hit our growth plans.

A major factor that affects an investor’s decision is talent, especially in terms of what you need and when you need it. Early-stage companies will need product development as well as goal/vision reform while later-stage companies will need help with process, execution, and maintaining sales results. Never assume there are no gaps that need to be filled – it is important that investors see you are willing to make adjustments to scale your business.

•      We handle our legal and accounting in-house.

From the get-go, surround yourself with advisors that understand your current stage and your type of business. Each region of the country has a community of professionals focused on growth-stage companies. Use them for a valuable source of advice, credibility, and for introductions to other investors and board members.

•      I am not sure how much incremental revenue we can drive from additional investment         in sales and marketing.

Understand the key performance indicators that create value for your business and show informative and easy-to-understand financial reporting. Always be prepared to discuss the effects of additional sales investments. Build a bottom-up forecast with projections for at least the next 24 months. Investors want to be confident that their investments will be dealt with in an efficient manner.

•      We know that we want a high valuation. Other than that, we aren’t sure what else we           need in a partner.

Take advantage of the fact that many investors are eager to meet companies long before they seek capital. Most teams have been tracked for months or even years – a cultivated investment process is better for everyone.

It’s important to consider all the factors that go into making an investment – the investor’s level of engagement, past experience, preferences and chemistry play a huge role. These factors are hard to assess in just one meeting so don’t worry that it takes time, with hard work well-deserved results will come.

Read source article here