How to Talk to Investors
- Keep to factual statements. Don’t lie and don’t promise things that are outside your ability to actually deliver. Imagine you’re raising money for a new drug company. Early tests suggest the compound you want to study may interact with other factors to help reduce the risk of cancer in lab rats. You shouldn’t tout it as a cure for cancer, because you wouldn’t want investors to claim you mislead them when the compound doesn’t work out. That’d be fraud.
- Avoid slander, libel, threats or investment advice. Don’t say bad things about competitors unless you can back them up with facts. Even then, think twice. Don’t engage in aggressive rhetoric that uses violent words. Don’t offer investment advice (unless you’re a registered investment advisor).
- Get smart about Reg-D. The SEC has regulations about how to raise money from investors. It also permits companies to be exempt from those rules if they meet certain criteria and follow a certain procedure. If your lawyer doesn’t know about Reg-D, get another lawyer. Here’s the description from the SEC’s website: Regulation D Offerings
- Be realistic. Projecting revenue probably isn’t realistic. Are you really going to be making $10 million in sales three years from now and then get to $100 million in sales by year five? Really? Another bad one is to say “The market for X is $30 billion dollars a year. If we capture just 1% of that market, we’ll be rich!” It’s just not the way most business works. Run your presentation and pitch by someone who hears pitches all the time and take their advice seriously.