Dealmakers vs. Dealbreakers

Not every single business idea is equally compelling to every single bank or investor. If you don’t do your research before approaching banks and investors, you risk breaking the deal before the get-go. Each has areas they are more specialized in than others. Find out beforehand which ones match your business idea the best.

Banks and investors are always eager to deal with promising new companies. But, avoid presenting unnecessary, aggressive forecasts and unrealistic revenue stage opportunities. During the approval process you will need to proof your worth. Don't set yourself up to fail and risk terminating a potential investment.

You should never openly dismiss current or future competition. Acting as if your business idea is superior to competing businesses, will most likely be regarded as either ignorance or arrogance. Showing respect for the competition sends a clear signal about your sense of reality and your readiness to compete. 

Always determine the favorable outcome of meeting with an investor or bank before approaching them. If you are not able to express precisely what you want you will probably not get what you came for. But if you do, your request will be perceived as convincing and reflected. Also consider the meeting from the bank’ or investor’s perspective - what end goals are they likely to have and how can you make your respective objectives meet?

It’s okay to be nervous when presenting your business idea to banks or investors. But, if you fail to show confidence during your presentation, you will have a hard time convincing them that you have what it takes to realize the potential of your business idea. Practicing your presentation will initially help you gain confidence.

Understanding what an investor values in terms of the outcome of your negotiation is crucial if you want the upper hand and make a good deal. It might be something non-economic, i.e. a seat on the board that you will be able to offer without selling out. Do your research before each meeting to score the big points in the negotiation.

Remember, for some people, it’s easy to confuse arrogance with confidence. Coming across too self-assured could provoke some investors or bank advisors. So, you need to balance your level of confidence and make an effort of showing your commitment. Apart from your idea, your commitment is what they ultimately invest in.

If by the end of a meeting with an investor, or a bank, the deal isn’t settled, often it pays off asking the straightforward question: "Please, if you have any doubts or concerns about making this investment, tell me, what are they?" Being open to their doubts and concerns is a strong indication of your trustworthiness.

Flexibility is critical when you want investors to help you out financially with your business. Take-it-or-leave-it terms seldom work because the motivation for investors will vary. And don’t try to enforce a minimum investment threshold. Be flexible and offer a variety of investment solutions to attract the right investors for your business.

Being good at pitching your business idea to investors is an advantage. But being able to stop the sales pitching in time is equally important. Once an investor has made the decision to invest, you need to step back and let the process happen without continuing to sell it.