What should founders keep in mind when approaching investors?
Leaders from Angel Capital Association, Ben Franklin Technology Partners and other funding institutions offered their four top tips.
Navigating the funding world as a first-time founder can be overwhelming. Stories abound about all the dos and don’ts of approaching investors. So what practical tips can founders looking to raise some funding follow?
Local investors and other stakeholders talked about all things investments at the first Tech Talks event hosted by the City of Philadelphia’s Department of Commerce. Here are four tips for beginners from these investment pros.
1. Build a strong relationship with investors
Margaret Bacheler, director of educational initiatives for the Angel Capital Association, said this is a relationship-oriented business, so it’s important to start one with an investor on the right foot. Rather than cold messaging or cold calling, take advantage of events and opportunities to get in front of the right investors, she said.
“The average angel deal right now is taking, believe it or not, eight to 10 years for an exit,” said Bacheler. “So this is a long-term relationship that we’re seeing with founders.”
Kevin Baumlin, chief medical affairs officer for the University City Science Center, specifically mentioned his employer’s Venture Cafe event as a way to get to know people and start a relationship with a potential investor. Bacheler also suggested signing up for Robin Hood Ventures’ office hours.
2. Go through the customer discovery process beforehand
Baumlin said it is important to go through the customer discovery process before approaching investors. He said founders have to take the time to explore and understand exactly what their product is meant to do.
“You have to go out and do it and meet people and ask questions and understand what your potential market looks like,” he said.
Margaret Berger Bradley, VP of strategic initiatives for Ben Franklin Technology Partners of Southeastern Pennsylvania, said investors want to be clear on whether your product is an idea or an opportunity.
“You need to know that there’s a product that somebody wants,” said Bradley.