Dealing with Investors
N.B. Please make sure you take time to read the whole article, as there are some super important tips at the end on what to avoid.
1. How to respond to & engage with new investor contacts
Talking to investors who connect with you is not as hard or scary as it sounds. They are human beings like you and they just want to find out more about your business and about you. So just relax and try to build rapport with them (in a professional way!).
Here are some best practices for responding to investors:
- Respond to investors as quickly as you can after getting contact.
- Use the internal messaging to begin with. If you have issues getting in touch, you follow up by email and/or phone.
- In your opening exchange with an investor, ask them what information/documents they need and whether they want to set up a call.
- Try to end each message with a call-to-action or question so that the investor has a framework to respond. E.g. Do you need any more information? Do you want to schedule a time to discuss this on the phone?
- Make sure you respond to every investor in your list. If there’s not much information on their profile, don’t be afraid to ask about their background and experience. Remember, you need to like them as well as make them like you!
- Use correct spelling and grammar in all your messages. It’s obvious, but too many people don’t and risk seeming unprofessional.
- Try to have documents ready (especially a slide deck and/or business plan). Investors may judge you on your ability to respond quickly and provide them with the right information. You should also consider preparing: Financials, a Due Diligence Pack and a Shareholders Agreement.
We’ve written a more detailed article about this in our Learn section here
2. Getting to know prospective investors: Due Diligence
Once you are connected with an investor and are happy with the direction discussions are headed, you should consider conducting some basic due diligence on them.
(We carry out profile checks on investors when they register and monitor their activity on the site. We also advise entrepreneurs to let us know if they have questions about any investor they are talking to.)
But it’s a good idea for you to make sure they have the experience they say they have. Besides, you’ll want to get to know an investor as much as possible before they come onboard! All good investors will be happy for you to ask them about this and will provide the relevant information.
What to do:
- Ask investors about their background and any previous investments.
- Conduct basic research online – you should be able to find their digital profiles and any articles about them.
- Speak to people they’ve worked with previously. You can ask the investor to connect you with people or you can reach out directly through LinkedIn.
- Use common sense. If you grow even a little bit suspicious, use the 'Report' button on the investor's profile, so that we can investigate.
What to avoid:
- Anyone who contacts you directly and does not appear in your list of interested investors. If this happens, ask them to connect through the site. If they refuse, avoid further discussions.
- Investors who pressure you to make a quick decision. Genuine investors will respect your decision-making process and will not try to hurry you.
- Investors who ask for upfront fees. There is no reason for you to pay an investor any fee, so ignore any reason given and report the investor to our team.
- Travelling to meet potential investors until you have had good discussions over the phone or Skype. It’s far cheaper to send your business plan via email than hand it over in person!
We’ve written a longer article on due diligence which you can read in our Learn section here
