Clear and concise is the way to go when selling investors on your idea
Clarity can go a long way toward convincing an investor to buy a stake in your business. If you believe your company is headed in the right direction and you have evidence that clearly backs up this notion for potential investors, you could be on your way to making a connection that will help you achieve your goals.
If you can’t provide that evidence in a quick, concise manner, you’ve got a problem.
“Investors want to know what the story is, what the need is and what their money is going to be used to do,” says Ed Lambert, senior vice president and senior market manager at Bridge Bank. “If you can’t explain what you do in two pages, you probably need to go back and do some more homework.”
The move to raise equity can be a challenge, especially if you’re an entrepreneur who has put your blood, sweat and tears into building your company from the ground up. It only gets harder if you’re not completely on board with bringing on a business partner.
“This is your baby,” Lambert says. “Do you really want to give away part of your child? Better said, are you willing to share custody? And if so, with whom?”
Smart Business spoke with Lambert about the decision to raise equity and the best way to approach investors.
How do you know when it’s time to raise equity for your business?
Before you approach an investor for an equity injection which will result in you giving away part of your company, you should always look at debt as an option. Talk to your banker and explore the various possibilities that are out there, both within the bank and through relationships the bank has in the community.
It’s also important to have people on the financial side doing the blocking and tackling of looking at the numbers and understanding where your company is at. You may come to a point where you realize that you’ve gone as far as you can on your own and you need to raise equity. If you’re up to your neck in demand and you can’t fulfill the orders you’ve got coming in without an equity injection, that’s a good place to be and the evidence speaks for itself.
If it’s not as clear cut, you need a banker or investor to be able to look at your numbers and say, ‘Yeah, I see where you are coming from. We need to look at raising equity.’
How important is the mindset of the CEO?
Bankers are analyzing the numbers, but they are also relying on instinct. Does their gut tell them that you are a person they can work with? Can they trust you? Will you keep your word and back up what you say? It’s absolutely key that there is a comfort level between you and your bank.
You don’t have that many at bats with the investment community. If you send them something that is unfocused, they are going to seriously question what you’re trying to do. It’s the fundamental core of every relationship. You need to convey a level of confidence and determination, backed up by numbers that show you are someone that a bank and/or an investor should want to be in business with.
What’s the key to making a strong presentation?
There are typically three types of financial scenarios for your business when it comes to raising equity: best case, worst case and most likely. Each of them plays a role. The best-case scenario is what you show investors.
This is what you think your company is capable of doing with equity from this investor under the right conditions. Most likely is what you’re going to use internally when you’re talking to your own people. Here are the goals you think you can achieve by raising equity.
The worst-case scenario is what you share with your bank. Bankers are lenders, not investors, so they are always going to want to look at the most conservative scenario. The bank isn’t betting on you being the next Google. It’s betting on whether or not you are capable of paying them back.
Recent NewsBridge Bank Extends $15,000,000 Growth Capital Term Loan to ExamityBridge Bank's Business Escrow Services Group Launches New Paying Agent PlatformBridge Bank Extends $12,000,000 Credit Facility to EllevationAlex Tsarnas Joins Bridge Bank Team to Lead Its Newly Established Banking Group, Business Escrow ServicesBridge Bank Expands Capital Finance Group Adding Several New Positions
Recent InsightsNational Economic Intelligence Report Provides Glimpse into Post-Pandemic EconomyAnalyzing life sciences VC activity's main hot spotsAustin's VC Ecosystem Tops $2 Billion in Value for Third Year RunningNew York Sees Second-Highest Annual Exit Value at Nearly $37 BillionCytoSorbents Delivers Technology to Calm the Storm
Join us virtually for Markets to Watch: Pacific Northwest to discover how the PNW’s reputation for innovation has helped fresh capital flow into the VC ecosystem with commitments to new investment funds. RSVP today to attend and learn more. bit.ly/3odHXY4 - yesterday pic.twitter.com/hoFdrqjYBcFunding for leading database software and cloudtech & DevOps segments bounced back in 2020, in the PNW, posting gains on deal count and aggregate deal value. Download our report, Markets to Watch: Pacific Northwest to learn more and read the analysis. bit.ly/2R6cYkB - 2 days pic.twitter.com/OcWPQUF5QEOn May 19, our panel of experts will provide analysis and key insights into the VC ecosystem of the Pacific Northwest, which posted a record $5.4 billion in value for 2020. RSVP now to attend this informative, virtual event. bit.ly/3odHXY4 - 3 days #pnw #venturecapitalThe Pacific Northwest’s VC ecosystem posted a record $5.4 billion in value for 2020. Download our report, Markets to Watch: Pacific Northwest to learn more and read the analysis. info.bridgebank.com/markets-to-wat… - 4 days pic.twitter.com/HTrfF4UWCoWe would like to extend our congratulations to our client, Securly, for their recent acquisition by Golden Gate Capital. Comprised of parents, educators and technologists, Securly is the first and only provider of enterprise security for K-12 schools since 2013. pic.twitter.com/OoRHNh5coQOur Boston-based Technology Banking Group recently provided a growth capital term loan to Examity, a technology company concentrating in the online proctoring market. Read our press release to learn more. bit.ly/3eWeu0g - 1 week 4 days agoLearn how liquidity surges are fueling reinvestment into life sciences ecosystems by downloading a complimentary copy of our report Life Sciences Markets to Watch. The report also contains analysis of trends in valuations and financing sizes and their implications. pic.twitter.com/mWrsT22dBZFind out how CytoSorbents delivered technology to calm the storm during the COVID-19 pandemic. Read more here: bit.ly/3e6F1su - 2 weeks 1 day ago #lifesciences #bridgebank #cytosorbentsJoin us for Life Sciences Markets to Watch and discover how likely venture investment in life sciences will continue at a rapid pace with strong liquidity and rates of funding. bit.ly/3dwyk2C - 2 weeks 3 days ago pic.twitter.com/0BFseH6AZrThe three major life sciences hubs in the U.S. set a record in venture capital invested in 2020. Download our complimentary report, Life Sciences Markets to Watch, to learn more and read the analysis. bit.ly/3gnq7Q9 - 2 weeks 4 days ago pic.twitter.com/jtO8XiJOa7CytoSorbents is celebrating five years as a Bridge Bank client. Read more at bit.ly/3n26LBA - 3 weeks 1 day ago #lifesciences #bridgebank #cytosorbentsOn May 5, our panel of experts will provide analysis and key insights into the three major life sciences ecosystems in the U.S., which set a record in venture capital invested in 2020. RSVP now to attend this virtual event. bit.ly/3dwyk2C - 3 weeks 2 days ago pic.twitter.com/L2LpL5ooZuWith strong liquidity and rates of funding, it is likely that venture investment in the space will continue at a rapid pace. Download our complimentary report, Life Sciences Markets to Watch, to learn more and read the analysis. bit.ly/3gnq7Q9 - 3 weeks 3 days ago pic.twitter.com/iH1LMoypkaOur #LifeSciences Group recently provided a term loan to Adarza Biosystems, developer of the ZIVA platform, a next-generation biomarker discovery and therapeutic research tool. pic.twitter.com/CR160SrQKbAustin’s VC ecosystem topped $2 billion in value for the third year running in 2020. Download our report, Markets to Watch: Austin, TX, to learn more and read the analysis. bit.ly/3sGCwly - about 1 month 2 days ago #Austin #venturecapital pic.twitter.com/75Kk4auvZdJoin us for Markets to Watch: Austin, TX to discover how the Austin VC ecosystem still secured a record $2.3 billion in aggregate value thanks in no small part to the its resilient enterprise tech sector. RSVP by clicking the link: bit.ly/3rzsUaZ - about 1 month 3 days ago pic.twitter.com/Ml7OkIKMS2Key top-level trends that defined VC deal-making in Austin last year can be found in our report, Markets to Watch: Austin, TX. The report also contains analysis of Austin’s banner year for exit value creation. Download it now: bit.ly/3sGCwly - about 1 month 6 days ago pic.twitter.com/ZQzJ6GiCtwJoin us and PitchBook, along with special guest Silverton Partners to discover key top-level trends that have defined VC deal-making in Austin. RSVP by clicking this link bit.ly/3rzsUaZ - about 1 month 7 days ago pic.twitter.com/M3ithiqhjjOn April 14, our panel of experts will provide analysis and key insights into Austin’s VC ecosystem, which topped $2 billion in value for the third year running. RSVP now to attend this informative event. bit.ly/3rzsUaZ - about 1 month 1 week ago #Austin #venturecapital #technology #innovation pic.twitter.com/gzRc4qJELoAustin’s VC ecosystem topped $2 billion in value for the third year running in 2020. Download our report, Markets to Watch: Austin, TX, to learn more and read the analysis. bit.ly/3sGCwly - about 1 month 2 weeks ago #Austin #venturecapital pic.twitter.com/ltpq7r20P8Join us for Markets to Watch: Austin, TX to discover how the Austin VC ecosystem still secured a record $2.3 billion in aggregate value thanks in no small part to the its resilient enterprise tech sector. RSVP by clicking the link: bit.ly/3rzsUaZ - about 1 month 2 weeks ago pic.twitter.com/ztR0lKmyzEOur Technology Banking Group recently provided a venture debt facility and working capital line of credit to Step. To learn more, read their recent press release. step.com/press/step-sur… - about 2 months 1 week ago #bridgebank #step #fintech pic.twitter.com/MzAtQGOTu9We are pleased to announce that we have launched Bridge Bank Gateway, a new digital paying agent platform that simplifies and accelerates complex M&A transactions. Read our recent press release to learn more. westernalliancebancorporation.com/bridge-bank-ho… - about 2 months 1 week agoWe would like to welcome Alex Tsarnas to the Bridge Bank team. Alex will be leading our newly established banking group, Business Escrow Services. Read our press release to learn more. westernalliancebancorporation.com/bridge-bank-ho… - about 2 months 3 weeks ago #mergersacquistions #privateequity #bridgebankIn observance of Presidents' Day, all Bridge Bank offices will be closed on Monday, February 15. #PresidentsDay pic.twitter.com/6eMQQeNJipOur team of asset-based lending professionals is growing! Read more about it here: westernalliancebancorporation.com/bridge-bank-ho… - about 3 months 3 days ago #assetbasedlending #bridgebankOur Life Sciences Group recently provided a Term Loan to Bolder Surgical, a medical device company focused on commercializing mini-laparoscopic surgical devices aimed at improving and enabling laparoscopic procedures for pediatric patients. #lifesciences #medicaldevices pic.twitter.com/hKgRzmVhaZ“Not everybody can be famous but everybody can be great because greatness is determined by service… You only need a heart full of grace and a soul generated by love.” ~ Dr. Martin Luther King Jr. In observance of MLK Day, all Bridge Bank offices will be closed on Mon. 1/18. #MLK pic.twitter.com/rBAo4INJXBOur Technology Banking group recently provided a growth capital term loan to Funraise, a software company that provides a state-of-the-art fundraising platform, saving nonprofit organizations time and resources spent on data management. pic.twitter.com/StETyssfLeOur #Technology Banking group recently provided a credit facility to @DrinkHealthAde, an organic beverage company. To learn more details, read our press release. westernalliancebancorporation.com/bridge-bank-ho… - about 5 months 2 weeks ago pic.twitter.com/0eWWI16N08Our Technology Banking Group at Bridge Bank recently provided a credit facility to CloudBolt Software, an enterprise leader in cloud management and integration solutions. Visit westernalliancebancorporation.com/bridge-bank-ho… - about 5 months 3 weeks ago to learn more details. pic.twitter.com/8fzjGbAL6BWe honor all of the veterans who have served our country. Thank you. #HappyVeteransDay REMINDER: In observance of Veterans Day, all Bridge Bank offices will be closed on Wednesday, November 11. pic.twitter.com/IfoGP8ecCAWe would like to welcome Jon Berry to the Bridge Bank team! Jon supports our Technology Banking group and will be based in Austin. Read our press release to learn more. #technology #banking #Austin #Texas westernalliancebancorporation.com/bridge-bank-ho… - about 6 months 6 days agoIn observance of Columbus Day, all Bridge Bank offices will be closed on Monday, October 12. pic.twitter.com/BtX52D5RTPWe wish everyone a safe and relaxing #LaborDay holiday weekend. REMINDER: In observance of Labor Day, all Bridge Bank offices will be closed on Monday, September pic.twitter.com/09SIuoO7XGOur Technology Banking Group recently provided MIVA, an #ecommerce #software and service provider, with a credit facility. Read our press release to learn more: westernalliancebancorporation.com/bridge-bank-ho… - about 8 months 2 weeks ago #technologybanking pic.twitter.com/OUj49RdD5VOur Life Sciences Group is pleased to announce an upsized term loan for Fennec Pharmaceuticals, a pharmaceutical company focused on the development of PEDMARK™ (a unique formulation of Sodium Thiosulfate) for the prevention of ototoxicity from cisplatin in pediatric patients. pic.twitter.com/zrH2JslA27