Approach
It is always wise to think about approaching investors as early as possible, given that fundraising can often turn out to be an iterative process.
Ensure that you have a story to tell and a compelling vision, which your potential investors can buy into.
Do your homework first and only address investors relevant to the stage you are at; investors are making daily choices about which business plans to hear out, as there are only so many hours in a day.
Rather than “selling ahead of the curve” and spending a lot of time convincing investors what you “will” do, far better to show them what you have achieved so far, while lean, and outline the roadmap ahead. In any approach, a warm introduction goes much further than a cold call or email.
Engagement
Ideally, you will be able to demo, at the very least, a minimum viable product.
In your investor meeting, ask for product feedback (before you ask for money). It may be handy to have a few access codes or trial accounts ready to enable your potential investor(s)’ organisation to try out the product or service in advance.
Did they get it straight away? Is there a real pain-point to be solved? Does my product solve it?
If the answer is yes to all (and you have a passionate, committed team), it may be a good time to polish the pitch and get ready to present it.
Before embarking on too many approaches, however, it is worthwhile studying the deals your potential investor(s) have done to date, understanding why they have done them and what it was that they liked so much.
Rest assured, they will be asking themselves the same questions about you.
Traction
Results speak more powerfully than pitch decks. In today’s digitally-connected world, where every piece of data, Facebook interaction, Twitter feed and app download are in the public domain, your progress will be closely tracked by a long list of potential investors, some of whom may reach out to you. Your future partner may or may not be among them.
Either way, don’t be distracted. You should always retain focus on the basics: build a great product, show it when ready, and scale up. If you achieve demonstrable traction, you will have instantly catapulted yourself two steps ahead. That may be the best moment to lock-in your funding, while always being careful not to jump in haste.
The fact that you have options will ideally give you the confidence to not just talk to any investors and take in the first funding available, but to approach the highest quality investors, who will ultimately be your best long-term partners on your journey to building a great business.