Today we live in a day & age where 20 year old students who are still in the final year of college start multi Million Dollar companies. By the time they go to their mid 20s, the valuation of that company is easily over a few hundred Million and in some cases closer to a Billion or more. Handling employees, vendors, Government officials and clients can be a little challenging for these wunderkinds, who have quickly scaled their companies to a few thousand employees, as that comes with experience. Being a CEO/ MD/ Founder of the company ensures that any misunderstanding can be managed easily and can be sorted out easily.
However, the same can’t be said about investors. Private Equity Funds, Mutual Fund Houses, Investment Banks, Venture Capital Funds, Individual Investors, etc are some highly influential people with deep pockets and are highly respected all over the globe. These are people who are responsible for the funds that your organization needs in order to grow and achieve its true potential. They cannot be taken lightly and need to be handled very carefully.
Investors invest in a company on the basis of a few meetings that happen over a few months. One wrong word or rubbing them in the wrong way may be the end of that opportunity for you as it may make them wary about the deal in some way. That could be the end of funding for you and may result in your company shutting down, or the investor may team up with some other investors to ensure that you are no longer a member of the board or may be replaced as CEO. Both the scenarios will result in you getting locked out of your company and having no control over its future.
The best way to handle board meetings, investors and other major stakeholders is to first clearly understand the details that they need and then share your answers. A clear understanding of the question lets you phrase a good logical response in your mind. While answering, try to keep your responses as short as possible and to the point. People who stray away from the topic are not appreciated.
It really helps to network very well. Knowing the who’s who of the financial world is very important in order to get their audience and finally their funds. Attending courses that can help you grow your knowledge about investing and investors can really help. BSE Institute Ltd is a subsidiary of BSE Ltd that offers multiple short term and long term courses for strengthening ones financial knowledge. It is located at the heart of India’s financial district, in Mumbai and takes full advantage of its location to train, skill & support people wanting to build a career in the BFSI sector.
Having a clear structured thought process is very very important and is what swings investors in your favour. Many times when your company is still too small with minuscule sales, it is the force of the Founder’s personality & his credentials that can help convince the investor’s to invest in a company. Investors sometimes bet on people, more than they bet on a company.
You will not get too many meetings with investors regularly as they too are very busy, hence it is important to be in the best form on that particular day. Getting a background check done about them is very important. That will give you important tips about what he/ she likes and will assist you to make a proposal accordingly. Being comfortable with the financial ratios and other figures that investors usually ask for is a given. Being aware of all the technical and legal requirements of the business is also a must. Sometimes, it is necessary to have an independent director. An independent director is someone who has a lot of industry experience and is highly sought after and respected professional of that sector. Having a few people at the bback of your mind, who can fill these big shoes is very very important.
A major mistake that most people do is to believe that all questions need answers immediately. No! Even investors realize that nobody can have all the answers at the tip of their tongue and they are sometimes just testing you and your presence of mind. Just saying “I don’t know” is bad, but saying “I cannot answer that at the moment, but I can surely share these details with you by ______ (set time period)” is an excellent way to manage the situation.
One important thing that everyone must remember is that every question can have multiple correct answers and sometimes you may not have all the answers, but it’s important to make the investor believe that you and you alone are the person who can answer these tough questions.