You're reading Entrepreneur Middle East, an international franchise of Entrepreneur Media.
Securing funding is one of the biggest challenges of starting a business, and there’s nothing more intimidating than a face-to-face meeting with a potential investor. Tyler Hartung, COO of the Unreasonable Institute, which runs accelerator programs that arm social entrepreneurs with the tools they need to start their business, says the first thing to do is make sure you identify the right kind of investor. Find ventures like yours and see who funded them. Or look at conferences that are within your industry. “A lot of funders show their faces at conferences, whether you're working on renewable energy or women's empowerment or global education,” Hartung says. “You don’t necessarily need to spend the money to go to those conferences. Just see who is planning to attend.” He also recommends the Unreasonable Institute’s Enable Impact, a new platform where you can see funders and entrepreneurs who are in the space of social and environmental good. Once you’ve done your homework and landed that big meeting, don’t sweat it. Keep these three tips from Hartung in mind.
1. Come up with a number you can justify.
Before you go into the meeting, do the math and figure out how much you realistically need to start your business. Don’t undervalue your idea, but it won’t help to inflate it either. Show that you’ve put in some real thought and did the calculations. “We see entrepreneurs all the time come in with a completely made up number that, when you dive into why they need that dollar amount, they can't justify it.” Hartung says. “They don't understand what they are going to do with that money.” The more specific your breakdown—it could be for hiring sales people, buying technology, or building a marketing campaign—the better prepared you’ll be to defend your ask.
2. Be honest.
Want to raise your standing in the eyes of an investor? Don’t sugarcoat your idea. “Funders are not fooled,” Hartung says. “They understand that entrepreneurs are going to have rose-colored glasses. But the more an entrepreneur can admit where their holes are, their shortcomings, the more funders are going to trust that entrepreneur.” If you present an unvarnished view of both the advantages and potential pitfalls, a funder will trust you’re going to communicate with them honestly. They’ll also value that you are clear-eyed about all the risks associated with your startup.
3. Make the most out of rejection.
Remember, rejection is normal in business, and a “no” can even be a good thing. “Be thankful if they say no.” Hartung says. Hartung talks about a friend whose second-favorite answer is, ‘No. “‘Yes’ is of course his favorite, but his least favorite is getting ‘maybe’” he says. “He always wants to know, 'What is going to get you to a yes or no?’” Because being in limbo, frankly, sucks.”
If the result of the meeting is a no, make the most of it. First, thank the investor for taking the time to meet with you. Then ask them who else they know that would be a good fit. “Usually, they know at least 10 or 15 other funders,” Hartung says.
Also, don’t leave the meeting without understanding why you were rejected. Are you too early in the startup stage for them? Do they not have any money left for funding? Or do they have some serious concerns about your business model? “Always get feedback on where they see the biggest shortcomings of your business, or things they would recommend you look at more deeply,” Hartung says.
The Venture is a new global social enterprise initiative searching for extraordinary startups and new ideas that use business to create positive change. If you have a GCC-based social enterprise or an idea for a social enterprise, enter The Venture #WinTheRightWay to potentially win your share of US$1 million.