By Fernando Berrocal
As a startup entrepreneur, you know that brand-new businesses encounter many different sorts of issues during their lifetime–too many to mention in just one article. Dealing with some of these issues can be delayed, since they are less important to the launch and growth of the startup. Other issues, on the other hand, must be resolved in the early phases of a startup’s development.
Typically, a salesperson's duties include dealing with different types of objections. In particular, if you're a brand-new startup, your ability to overcome the most typical objections you encounter regarding your product and/or service can make or destroy your business. As a result, the investor objections that might arise are a frequent challenge for startup founders to face–their ability to overcome them is fundamental for the growth of their startup. In this post, we will describe some of important approaches to addressing investor objections in your early-stage startup.
- Deal with Investment Concerns Immediately
The easiest strategy to manage investor complaints is to address them in advance. Consider potential barriers to success that might arise, such as:
- Having a single founder or co-founder
- Having too many founders (in an extreme scenario)
- Unfinished development process of a good or service
- Being stuck in the concept stage of your business
- Developing an idea in a sector that is experiencing adverse circumstances
When criticism inevitably arises from your business investors, work on addressing it as soon as possible. Communicate the fact that, as a founder, you must contemplate every struggle that you might face in terms of the viability of your startup Idea. To complement that, you can try this simple method: talk about your industry for 30 seconds, and then address any potential objections for the next 60 seconds that follow. Write down the points you cover during this exercise; these notes can serve as a guide to the issues that might arise, so you will be ready to face them.
- Applying a Sales Strategy Approach
When dealing with investor reluctance, try to handle it with a specific sales process strategy. In this methodology, instead of providing a standard elevator pitch to your business investors, act as though you are selling an important service to them. By doing so, the interaction is reframed as a regular dialogue; one in which both sides are sharing important information. This is ultimately more effective than a one-sided attempt to seize a specific business opportunity.
- Show The Investors Specific Business Data
Giving the investor detailed information about your startup's current environment (in terms of a particular business sector) is important. There are outside factors that can harm - or help - your startup, and those must be highlighted to the investors with specific business data obtained by inside and outside sources within the business. You can obtain external information sources through detailed investigation, or by sharing information through networking-oriented social events.
Consider one example: a startup in a business sector that is now struggling as a result of the 2020 COVID-19 outbreak. To demonstrate that industries affected by crises recover over time, you might refer the potential investor to developments that emerged during the 2008 financial crisis. These are two different types of economic crises; the first was a pandemic, the second was a real estate issue that transformed into an economic struggle. Both crises financially affected many kinds of businesses in various global sectors–but eventually, businesses overcame these struggles in the following years.
- Bring the Attention of Your Investors Back to What You Stated
Addressing potential investor objections before they eventually arise is another key to success. Be realistic; you can’t possibly address all of the problems - it’s practically impossible - however, you can address the vast majority of those problems. This enables you to demonstrate that you have thought about all of the potential complaints that might arise in advance, and are certain as to why the complaints will not develop into eventual issues. Subsequently, all you have to do after your initial sales presentation is to refer investors to your in-depth, comprehensive plans to handle potential issues.
- Avoid Back and Forth Discussions
As much as you can, try to avoid exchanging points back and forth with your investors in any case scenario. If an issue arises in the dialogue that follows, simply refer the investor to what you stated before, as you've already addressed it. You want this to discourage the investor from bringing it up again and again. They shouldn't feel foolish investing in your startup, since you want them to believe that you have considered every possibility in advance and that they are in good hands with your business idea. Working with startup investors may be an intimidating experience at first, but learning how to handle conversations psychologically will help you succeed in the long run.
Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.
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