- Gaining outside investment requires effective communication and developing rapport with potential investors.
- Understanding the psychology of investors is crucial, as emotions, biases, trust, and credibility influence their decisions.
- Investors are generally rational but can be influenced by emotions and cognitive biases such as anchoring bias, confirmation bias, availability bias, halo effect, and misinformation effect.
- To minimize the impact of biases, provide a comprehensive overview of the business and market and challenge preconceived notions.
- Framing information in a way that overcomes biases and addresses investor worries upfront can lead to more objective and informed conversations.
- For example, De Bono's Six Thinking Hats is a recognized tool for minimizing bias and encouraging objective thinking by considering different perspectives.
- Emotional intelligence is crucial in investor conversations as it helps entrepreneurs understand and control their emotions, empathize with others, and build rapport.
- Effective emotional communication involves showing empathy, listening and responding directly to questions, and using body language and eye contact.
- Getting to know investors personally can create a sense of mutual understanding and demonstrate commitment to their individual needs.
- Tailoring communication to individual investors' preferences, such as analytical or story-driven approaches, is important.
- Building trust with potential investors requires honesty about potential risks and problems, regular updates, and providing verifiable information.
- Clear communication is essential, using simple language, real-life examples, and visuals and asking questions while listening actively.
- Different communication channels require different approaches, with some topics best suited for face-to-face or video meetings.
- Overcoming objections is crucial in investor conversations, and strategies include anticipating objections, acknowledging concerns, providing evidence, being open to alternatives, staying calm, and focusing on common ground.
- Leveraging social proof, such as past successes, testimonials, notable customers or partners, and media coverage, can influence investor decisions.
- Understanding investors' psychology, building trust, and tailoring pitches increase the chances of securing investment.You can learn more about the above and much more via InvestIQ. Designed by a team with a proven track record of supporting clients to raise over ￡45million, InvestIQ is an online programme for those raising investment for the first time.As well as accessing special resources like example investor decks and investor lists, you'll learn?how to find, approach, and engage with potential investors, create a compelling pitch, handle challenging questions, negotiate fair deals, and manage post-investment relationships. You'll also gain valuable insights on navigating special scenarios like raising funds during economic downturns.
