How do you answer an investor question?
The best way to answer this question is to be completely transparent. Tell them exactly how much money you've raised, from which investors, and at what valuation. If you're not sure how to value your company, there are a few different methods you can use, but the most important thing is to be consistent.
- Respond. I would say that anecdotally over half of the time I reply to an outreach asking further questions, I hear nothing back. ...
- Show you are interested. ...
- Answer the question. ...
- Clarify how the investor can be supportive beyond money.
- There's No Such Thing as Average.
- Volatility Is the Toll We Pay to Invest.
- All About Time in the Market.
Other Investor Meeting Musts:
Use real-life examples or scenarios to illustrate your points, explain why your brand addresses actual events and problems, and use forward looking statements and similar expressions to describe the bright future of your company.
- What problem (or want) are you solving?
- What kinds of people, groups, or organizations have that problem? ...
- How are you different?
- Who will you compete with? ...
- How will you make money?
- How will you make money for your investors?
- Serial investor Magnus Kjøller receives more than 500 cases annually, and in many cases has founders an unrealistic view of their own business when they apply for capital. ...
- “It can't go wrong”
- "We have no competitors"
- "I need a director's salary"
- "We need capital - not your help"
So they're going to want to know exactly why you need the cash and exactly what you plan to do with it. They'll also want to know when they can expect a return; that should be a part of your business plan. Investors will also be looking for an exit strategy, and you need to think about that in advance.
Trade-offs must be weighed and evaluated, and the costs of any investment must be contextualized. To help with this conversation, I like to frame fund expenses in terms of what I call the Four C's of Investment Costs: Capacity, Craftsmanship, Complexity, and Contribution.
- Keep some money in an emergency fund with instant access. ...
- Clear any debts you have, and never invest using a credit card. ...
- The earlier you get day-to-day money in order, the sooner you can think about investing.
The 4% rule entails withdrawing up to 4% of your retirement in the first year, and subsequently withdrawing based on inflation. Some risks of the 4% rule include whims of the market, life expectancy, and changing tax rates. The rule may not hold up today, and other withdrawal strategies may work better for your needs.
How do you impress an investor?
- A Market They Know And Understand. By choosing an industry they comprehend, investors reduce the risk of squandering their investment. ...
- Powerful Leadership Team. ...
- Investment Diversity. ...
- Scalability. ...
- Promising Financial Projections. ...
- Demonstrations Of Consumer Interest. ...
- Clear, Detailed Marketing Plan. ...
- Transparency.
- Craft a Clear, Concise Pitch. When speaking with potential investors, you need to make every second count. ...
- Articulate Your Product's Value. ...
- Tell a Compelling Story. ...
- Explain What Funding Would Provide. ...
- Highlight the Specific Investor's Appeal.
- Do practice your pitch until it becomes natural.
- Do keep the conversation on track during the meeting.
- Do focus on the product innovation, market disruption, and venture/project team.
- Don't “info dump” – your pitch should tell a concise story about your journey and vision.
- Don't Delay Current Section,
- Asset Allocation.
- Diversify Your Portfolio.
- Rebalance Periodically.
- Keep an Eye on Fees.
- Consider Tax-Loss Harvesting.
- Simplify Your Investing.
- Key Takeaways.
Investors gauge profitability through net income and expense comparisons. Net income is the total amount of money a company pulls in after deducting all expenses, known as the bottom line. A balance between net income and expenses is a key indicator of good company management and a positive sign to investors.
- Have a Financial Plan. ...
- Make Saving a Priority. ...
- Understand the Power of Compounding. ...
- Understand Risk. ...
- Understand Diversification and Asset Allocation. ...
- Keep Costs Low. ...
- Understand Classic Investment Strategies. ...
- Be Disciplined.
Common investing mistakes include not doing enough research, reacting emotionally, not diversifying your portfolio, not having investment goals, not understanding your risk tolerance, only looking at short-term returns, and not paying attention to fees.
- Overconcentration in individual stocks or sectors. When it comes to investing, diversification works. ...
- Owning stocks you don't want. ...
- Failing to generate "tax alpha" ...
- Confusing risk tolerance for risk capacity. ...
- Paying too much for what you get.
Challenge. While some investors will undoubtedly have little knowledge, others will have too much information, resulting in fear and poor decisions or putting their trust in the wrong individuals. When you're overwhelmed with too much information, you may tend to withdraw from decision-making and lower your efforts.
Searching for the magic number
A lot of advisors would argue that for those starting out, the general guiding principle is that you should think about giving away somewhere between 10-20% of equity.
What do investors get in return?
Distributions received by an investor depend on the type of investment or venture but may include dividends, interest, rents, rights, benefits, or other cash flows received by an investor.
For instance, some investors may prefer very low-risk investments that will lead to conservative gains, such as certificates of deposits and certain bond products. Other investors, however, are more inclined to take on additional risk in an attempt to make a larger profit.
So, if you're aiming for $100,000 a year in retirement and also receiving Social Security checks, you'd need to have this amount in your portfolio: age 62: $2.1 million. age 67: $1.9 million. age 70: $1.8 million.
This sort of five percent rule is a yardstick to help investors with diversification and risk management. Using this strategy, no more than 1/20th of an investor's portfolio would be tied to any single security. This protects against material losses should that single company perform poorly or become insolvent.
By age 40, you should have accumulated three times your current income for retirement. By retirement age, it should be 10 to 12 times your income at that time to be reasonably confident that you'll have enough funds. Seamless transition — roughly 80% of your pre-retirement income.