What not to do when raising equity?

There are lots of articles that will tell you what you need to do to attract an investor’s attention. Very few of these advice columns will tell you what turns an investor off – so here are the trade secrets – things not to do or not to say:

1

Failing to add the ‘personal touch’

When we receive a business plan that has on the bottom right hand side of the front cover the words “copy number 173”, then we switch off. If it says, “copy number 1”, then we switch on. If it appears you are approaching a large number of investors, then we feel you’re failing to focus on creating a potential working relationship with us.

2

Failing to update the date on your presentation

If the date on the business plan is from 6 months ago, then not only do we know that we are not your first choice; but our competitors have declined the opportunity.

3

Don’t say ‘we only need 1% of the worldwide market’

No, no, no! This can be a meaningless number unless you have concrete figures to base this on.

4

Don’t say ‘we have no competitors’

To us, this reads, “I don’t know how to use Google”.

5

Don’t say ‘our forecasts are conservative’

You will believe this but your potential investor is likely to be sceptical. The phrase is so discredited that it’s best not to use. State factual assumptions not your opinion when it comes to the company’s figures.

6

Don’t say ‘we will exit by Trade Sale or IPO in 3 to 5 years’ unless you mean it!

Yes, I know your advisor told you to put that in the business plan but do you really believe it? It shows considered thought if you identify who might buy you and what precedents there are.

7

Don’t contradict what it says in the plan

If in a meeting, what you say doesn’t tie in to what you said in your plan, you lose credibility. Know it inside out and show you know it.

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