Dealing with investors is tricky for all entrepreneurs. But as a member of Generation Y, you don’t just have to field questions about your product or business model; you also have to learn how to anticipate and respond to common misconceptions about you.
As you probably know, Generation Y has a reputation. Most investors assume you’re tech-savvy and socially responsible, but the positive stereotypes pretty much end there. Here’s what investors are probably thinking about you before you ever walk through the door:
- Generation Y doesn’t care about ROI. Many dot-com-era investors recall how so many Silicon Valley startups were launched without a clear strategy for earning money. They’re wary of idealistic entrepreneurs without a solid financial strategy and articulated plan for growth.
- Generation Y wants collaboration, not direction. Investors assume you know you have other options, such as crowdfunding or angel groups. They may assume you want to use them for their industry expertise or business acumen, rather than form a lasting relationship.
To make a positive impression on investors, use these preconceptions to your advantage. Instead of highlighting how tech-savvy you are (which they already assume), use that time to talk about the viability of your idea. Make it clear from the first meeting that you’re focused on ROI and looking for a long-term partnership.
4 Things to Consider Before Meeting With Investors
In addition to addressing common generational stereotypes head-on, new entrepreneurs should spend a lot of time preparing for their first meeting to win over investors from the start.
- Decide whether you really need investments. Look at your business and decide exactly why you need startup cash. Will it make your company grow faster? Will it make your idea more successful? Always keep your funding as lean as possible. You’d be surprised by how much you can do on your own.
- Try letting someone else make decisions. Ask a friend or employee to make decisions about the future of your company for a few days to see how it feels. Will you be able to handle someone else making decisions for your business? If not, seriously consider whether to ask for investments. With a little more financial freedom comes less autonomy.
- Understand investors’ motivation. Investors are not friends or advisors. Even investors who want to give back or help an industry are still primarily interested in profit, so you need to show them how your business is going to make them money.
- Build success. If you want to attract investors, demonstrate success before approaching them. Whether it’s building a strong customer base regionally or validating your business through crowdfunding, success breeds success. Investors will see your initiative and results-driven mindset as a sign of your ability to produce results in the future.
2 Essential Tips for Meeting Investors
Once you’ve decided that you actually want to work with investors, it’s time to pitch. Pitching your idea for the first time can be intimidating, so here are a few tips to put you at ease:
- Start the conversation with crowdfunding. New projects, ranging from video games to movies, are being created through crowdfunding. Show investors the traction you’ve built with your fans on social media. Even if you haven’t raised a lot of money, a group of contributors or users grabs investors’ attention and reflects well on your business.
- Have a profit strategy. Determine a clear point in the future when you plan to start earning money. Nothing frustrates investors more than a great idea with little future earnings potential.
The No. 1 Mistake to Avoid
The biggest mistake I see Generation Y entrepreneurs make when pitching to investors is coming poorly prepared. Pitching your idea without financial projections or plans for future growth makes an investor doubt your ability to put your plan into action.
Great ideas often go unfunded because investors don’t grasp their value, but the burden isn’t on the investors to understand a business’ potential — it’s on you to convince them.
Generation Y has many traits that make them great entrepreneurs, but they also have a lot of preconceived notions to overcome. Do your homework, come prepared, and pitch with confidence. If you have a great idea and a solid strategy, you won’t be ignored for long.
Have you faced pushback from investors as a young entrepreneur? How did you overcome their objections?
Matthew Gordon is president and CEO of Gordon Group, a holding company that primarily managesGraduationSource andAvanti Systems USA. Gordon strives to foster positive corporate culture and empower young minds.