To guide you of how to prepare for a meeting with a capital investor, we have met two experienced investors. Namely, Petri Lehmuskoski (Gorilla Capital) and Lasse Lehtinen (Icebreaker.vc), of what they are expecting of a start-up at a first investment meeting.
Petri Lehmuskoski is a co-founder of two enterprises that both have featured on the lists of the fastest growing companies in Finland. He has invested in startups since the 2000s.
Icebreaker.vc’s Lasse Lehtinen, too, started his career with startups in the 2000s. Lehtinen was employed by a startup that was the second fastest growing technology company in Finland in 2007 and 2008.
– Many of us are dreaming of an exit of 100 million euros, but the chance of achieving such success is very small. There is no one right course of action towards succeeding in growing a company. It’s not always necessary to seek for world championship, but it could be enough to be the European or the national champion,” says Lehmuskoski.
Get to know the investor before hand
It is important to think of what kind of an investor you want to have and what you want to achieve.
– Today there are a number of good tools, such as LinkedIn, which you can use in getting to know an investor before meeting them. Then you can choose the best approach,” says Lasse Lehtinen.
– Investors have different kinds of investment strategies. Even if the business idea is good, it does not necessarily match the investor’s investment strategy, says Petri Lehmuskoski.
Some circumstances may lead to the investor saying that there will not be a second meeting.
– The reasons for making me consider whether there would be another meeting or not are constant time pressure in the entrepreneur’s day-to-day business, the sense that the entrepreneur’s only purpose for engaging in their business is making money and their incapability of teaming up,” Lehmuskoski continues.
It is vital for investors to know in what stage your startup is and how its shareholding is distributed. Thus understanding an investor’s investment strategy is essential.
– We aim to be the first investor in a company, and if at the start the shareholding is distributed so that the holdings of the team of entrepreneurs employed by the company are less than 70–80%, it’s often an obstacle to further discussions, says Lehtinen.
Give the investor a reason for investing in your startup
Petri Lehmuskoski wants to know why the entrepreneur has set up the enterprise. Motivation and in-depth knowledge behind the startup are also intriguing assets.
“I prefer to invest in companies that are based on in-depth expertise and that solve problems in the real world ” – Petri Lehmuskoski at Gorilla Capital
Lasse Lehtinen continues by emphasizing, – For instance, in-depth knowledge may stem from leisure activities or research. However, most founders have accrued their professional skills through their occupation.
– Moreover, management and recruitment skills are among the vital skills that a founder should have. Recruitment is the bottleneck of even the best growth companies”.
What investors say they value in company founders most are their ability to learn and analytically and realistically assess their company’s potential and situation.
– All the elements of success cannot be recognised in advance, but it’s easier to detect the factors that prevent success, says Lehmuskoski.
– You can usually find a million reasons why not invest in a company, but sometimes only one extremely good reason is enough for continuing the discussions, Lehtinen continues.
– My aim is to get to know the founder as well as possible and then look ahead the partnership. In fact, realistically, only few of a thousand ideas catch the wind in their sails. But then again, the ideas may rest on strong competences in teams, which may be harnessed in later projects.
Make a plan for the meeting schedule
– It’s important to know whether the meeting will last 15 or 90 minutes and plan it accordingly,” says Lasse Lehtinen.
– There is precious little time during one meeting. As a rule, a meeting starts with a brief introduction which may easily take five to ten minutes. That’s why you should have a one-minute presentation ready of your background and skills. It can then be used as a bridge to the current activities, and then there will be enough time for focusing on what is most important.
It’s worthwhile for founders to prepare for a meeting with care so that the investor gets a good first impression, as after meeting with a founder who has not adequately prepared for a meeting the investor may think that they will continue this line of action in future, too.
– You don’t necessarily have to know the answers to all the questions, but you should think beforehand of at least ten most common questions and find snappy answers to them. Before the next meeting, it’s advisable to prepare for the questions to which no answers were found right away.
In Petri Lehmuskoski’s view, the founder ‘s one and only target at a meeting with an investor only target at a meeting with an investor should be a new meeting.
– It’s very rare that somebody can be convinced to invest in a company during the first meeting. Too much reassuring may not bring the desired result, Lehmuskoski points out.
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