3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan
By Evan Carmichael on September 20th, 2011
Must Watch Video
Hi I’m Evan Carmichael and welcome to a special video edition of Ask Evan. Today’s post is brought to you by American Express Canada. They have just launched a new Facebook page called Amex for Business Canada so if you’ve liked my videos in the past, please check out their page and let me know what you think.
Alright, so today I’m going to answer a question from one of my readers Vinit who wrote in asking:
Dear Evan,
The problem for me is that I am an undergraduate and my total experience is approx. 24 months. The biggest problem for me is to make a business plan for investors and then convince them about my capability. Have a great day and thanks again for the information.
Regards, Vinit.
Thanks for the question Vinit – here are my thoughts for you:
1) Get Some Sales
Before I started EvanCarmichael.com I was in the venture capital business and looked at more business plans than I can remember. Most business plans get rejected right on the spot and you don’t get a chance to even come in and present your case.
The plans might have been poorly written, the idea might not have been interesting enough, or we had serious doubts about the entrepreneur’s capability of being able to make this a success.
One of the best ways to stand out from everyone else is to achieve sales. Just get one person to buy from you and show investors that people are willing to actually pay you for what you do and you’ll separate yourself from 90% of the other entrepreneurs who are pitching their ideas.
You don’t have to be making a lot of money but proof that someone is willing to buy your products or services is a great first step to establishing credibility with potential investors.
2) Build an Advisory Board
After the executive summary, one of the first places an investor will turn to in your business plan is your management team. They want to know who they are potentially investing in and what kind of experience you have.
The less experience you and your team have, the harder it will be to convince investors to give you money.
One way around this is to build an advisory board. Talk to people who do have experience and ask them if they’d be willing to be your advisors. They’re not liable like they would be if they were on your Board of Directors and the compensation for their advice is up to you. Often advisors are willing to join because they are excited about the future of your company and they don’t ask for any immediate compensation.
Being able to show that you have a solid team of advisors will go a long way to boosting your credibility and increase the chances of you getting the money you’re looking for.
3) Pass the Grandmother Test
There’s an expression within the venture capital industry around if your executive summary and business plan passes the grandmother test. In other words, would your grandmother understand the opportunity if you gave your business plan to her?
Remember that most investors are generalists. They’ll know a little bit about your industry but they won’t know it as well as you do. Too many entrepreneurs fill their business plans with jargon, complex industry terms and tech-speak, so much so that investors have a hard time understanding what their companies are all about.
If an investor can’t read your executive summary once and immediately understand what the opportunity is, then your business plan is going straight into the garbage and they’re moving on to the next opportunity. Make sure you show your plan to people who do not know your market and see if they can understand it before you start pitching investors. Pass the grandmother test!
Summary
I hope that helps Vinit! Remember if you want to increase your credibility with investors and improve the chances of them investing in your business:
1) Get some sales
2) Build an advisory board
3) Pass the grandmother test
Thank you for joining me for another edition of Ask Evan.
This post was brought to you by the Amex for Business Canada Facebook page. If you liked this video please check out their page and let me know what you think. I’d also be grateful if you leave a comment below.
Stay tuned for the next episode!
Evan.
Categories: Advice
Tags: advisory board, american express, american express canada, amex, business canada, business plans, capability, carmichael, doubts, entrepreneur, establishing credibility, executive summary, Facebook, how to write a business plan, investor, investors, proof, undergraduate, venture capital business, video edition
3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan: Must Watch Video
Hi I’m Ev… http://t.co/mvoKgxQV
3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://j.mp/r6SIKs [Entrepreneur Blog]
Another great video as always Evan! Thank you for your great tips!
3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/SSJ93IPO
3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/SSJ93IPO
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/zZ2dQl7Y
http://www.evancarmichael.com/blog/2011/09/20/3-seldom-used-ways-to-convince-investors-to-put-money-into-your-business-ask-evan/
3 http://t.co/KUApxoVF
3 http://t.co/ZIze8JKD
3 http://t.co/aT7DzSZs
3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/cBwC3pP7
3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan
http://t.co/bkXBL9ZP
http://www.evancarmichael.com/blog/2011/09/20/3-seldom-used-ways-to-convince-investors-to-put-money-into-your-business-ask-evan/
3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/k0vfZcYI
3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/MXrcEvCc
3 http://t.co/jPEXMKbO
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/jixXACE0
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/4XTnfsdD
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/MNelehas
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/Y2r7lc40
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/UQhmIc8f
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/Y6Kk4Z5W
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/APjLHVV5
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/3RyCiDXK
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/vTCMlLYS
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/iRmHdo4C
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/YhDfJljQ
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/2uPgVreY
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/2gKO9m2c
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/1KJlDlC9
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/lbR4J2Ax
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/p6wtJ7Gk
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/VilwUs5G
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/XDXzDaYK
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/WKMTrhen
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/V58hGjZq
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/jvcMFMl1
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/rgn4lgJQ
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/tHPRuVGP
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/8p8fvTly
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/JqfHPLyV
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/jjUtogap
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/gDoMi6bq
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/R1gN26mb
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/z1oVYamd
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/w0erHjCB
3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan #SM #SocialMedia http://t.co/emHresy4
RT @EvanCarmichael: 3 Seldom-Used Ways to Convince Investors to Put Money into Your Business – Ask Evan http://t.co/2Yczw0wq
It seems obvious but I agree that doing the obvious is often what is important. Get sales. Show people actually will buy your product or service. I really like the model of bootstrapping to build a real business (even if small) and then going to investors if needed. You are much more compelling then and should be able to get much more value for what you sell.
John – it’s too bad the obvious is lost on most entrepreneurs. If you come in with even a few sales you’ve already separated yourself from almost everyone else and you start to command attention. Beta customers are fine but paying customers are what you want.
These are nice tips. A lot of people want to venture into business knowing they can easily earn money from it. Business needs a lot of patience and wisdom to soar high. Convincing investors will help you start off your business on the right path.
I totally agree with the first tip. You will have to let your investors trust you with their investments. If you were able to get some sales and let consumers believed in you is the first step any investors would check. Good luck Vinit!
As always this is an amazing video Evan! I learned a lot from you because you don’t make it so difficult to understand. I really like that.
These are the essential and most important things to remember. I invest on businesses in our town and these are the qualities that I look for all the time. Great job on the video Evan!
Advisors plays a big role in your success. We need a mentor to guide and teach us how to be successful. These are great compilations of tips. I will save this for future reference.
Everything you said here made sense, Evan. This will help me a lot as I am planning to get some investors for my newly opened business. Thanks for the words of wisdom.
Nothing compares to your videos Evan. You are the most amazing person that provides magnificent tips and advices. More power to your website!
I am thankful that I got to see this post plus a great video. I have been asking myself how I can get investors to invest on my business. This would assist me on my plan. More power to you.
I agree, make your plan as simple as possible but with x-factor. This will catch their attention and make them understand what you really want to show them. Just like this video of Evan, simple but covered all the important things you need to know.
This won’t just help Vinit but a lot of people too, who wants investors to invest on their businesses. I for once went through a lot because I don’t have a guide like this to help me. I would love to share this remarkable post that might help people I know. Thanks.
Thanks Evan for this wonderful insight! I presented this to my father and he likes it. He said I should check your site more often so to learn more about how to put up or run a business.
I learned something new today. I hope it is okay to share this one with my friends at school. They will be happy to learn few new things about this topic.
Getting an investor put their money on your business is a great way to showcase your talent. You have to be prepared and wow your audience by following these tips. I will love to tell my husband about this and maybe we can use it on our own interest too.
I started my business with my own savings and then able to get some loyal customers after that. My dad told me to talk to an investor he knows, so that I could offer more services to my customers and get new ones too. He thought be so very well and he is a good mentor.
I lack the advisory board maybe that’s why my meeting with the investors didn’t turn out so well. Anyway, I still have time and I won’t give up. I will take note of your tips. I know I will win their heart this time. Thanks!
You are lucky, Vinit. Evan provided credible tips and I am sure you will be successful on getting investors after this. Two thumbs up for the video, Evan! Please post more.
Sometime we think that a proper business plan and a mentor can pass an investors meticulous eye. We forgot to get some sales to prove to them that we can make money out of it. This article reminds us to not forget to sell something first before offering your plan to an investor.
Investors are very wise but yet they want you to explain it using the simplest way possible. This will ensure that you can explain yourself very clearly without putting too many technical terms. I can attest to this since my boss is very particular on this matter.
Everybody doesn’t want to waste their money. So make sure that you will also put yourself on their shoe. Try to see things like an investor first. Think and feel like one of them, after that you will clearly know what is important and if it’s just a waste of time.
I have the same opinion, let someone see your business plan first and check if they will feel the same way as you do. This will help you to correct anything first before passing it to the possible investors. Goodluck Vinit!
Any problem always got a solution. You are good Vinit because you asked the right man. I admire Evan because he knows a lot and make sure to share it with us. Two thumbs up!
Wow thanks for the tips! I got the same questions and I can’t find anything online that can help. You gave tips like a pro but anyone can understand it very well. More power to your site, Evan.
As always this is an amazing video Evan! I learned a lot from you because you don’t make it so difficult to understand. I really like that
Great to hear! thanks for commenting!
Makes a lot of sense sense most people don’t like to take what is perceived as an unnecessary risk in pursuit of financial gain. I’ve found that many potential investors have difficulty going outside of the specific business industry comfort zone that has brought them success. After reading your article I can see the disconnect between my passion and understnading of a given business concept and the simplicity needed by potential investors as well as a strong and respected advisiory / mentor group
I’m glad I could help Patrick – good luck with your next presentation!
3 Fórmulas para convencer a los inversores para que inviertan dinero en tu negocio – inglés http://ow.ly/6L3Jx
3 Fórmulas para convencer a los inversores para que inviertan dinero en tu negocio – inglés http://ow.ly/6L3Jx
Everything genius is simple.
People make complex for two reasons,
trying to look smarter or on purpose.
All you have to do to be successful is,
be simply smart.
We intend to forget about simple thing when we
planning new business venture and we need someone like
Evan to remind us.
Thank you Evan.
Hi Evan – great video, simple and to the point.
I recently had a business and investment opportunity that I wanted to raise capital for. Needed approximately $1.5M to get it off the ground. Wrote the business plan and a pretty snazzy powerpoint presentation. I wish I’d seen this video before I started. Now I have to go back and re-write parts of it.
Still a great learning experience going through the process. Especially the Grandmother test. There is definately a good opportunity for that lazy money from retirees looking to invest into ventures that produce good income returns.
Great blog and has given me lots of ideas for my own. Thank you.
I’m glad you like it Jeremy – good luck with your next round!
Those are such really good ways to convince investors. Really helpful and would definitely be applicable to any kind of business you want to offer to investors. Keep it up! :)
I’m really fond of visiting your site. Always getting new ideas for my business. Good job on this one!
Thanks for this video! I like what you said about the Pass the Grandmother Test. That’s really essential in convincing investors.
As always, really great answers to readers’ questions! Keep it up Evan! :)
Business owners would definitely find this post really beneficial. Thanks for the video!
Building an Advisory Board seems like a really good idea to convince investors. Will definitely share this!
I’m so glad to came across your site. I learned a lot about running a business. Best regards!
I also have this question in my mind and good thing I visited your site and got the answer. Thank you so much!
I like your Ask Evan videos. They are very informative and your answers are really helpful. I like what you said on getting some sales first. That way, the investor would be convinced that your product can really sell. Thanks!
I’d love to be featured on Ask Evan as well! Thanks Evan for the great video and for the help!
When Evan gives answer to those question, you’d really know they will work! Good job Evan!
I wonder why business owners seldom use these great ways. Thanks Evan!
I like how you simply put answers to our questions. Also the answers are easy to understand that makes it easier to apply to business. Great! Thanks.
Would love to share this post especially those business owners who are struggling to convince investors to put money in their business. Thanks!
Glad to see sites that really help business owners. Your answer to the question is really helpful. Would like to ask a question as well.
It’s good to know what the investors expect from us. You have presented really good ways to convince investors. Keep it up!
It’s good that you also post a video. Thanks for the tips here!
I have an invention which Davision Corp. is helping me with. Right now it is in the engineering stage. Iam going to have the Davision Corp. Make out a check to who ever invest in the project and they will make out a check to me too. The project is a toy and it also will be A carnival ride which people will really enjoy. The Davision Corp. is targeting Huntar Corp. to produce and market the toy world wide. The Davision Corp will Take 10% of every 100000.00 dollars which comes in . and the rest will go to who ever invest and to me. I am trying to get my family off from social securty and supplement social security benifits. If you know some one who would like to invest can email me at vern1816@yahoo.com or can call me at 661-376-5022 and I can show all the details of the project. Who ever invest will make a lot of money every month.
[...] [...]