Searchers - How are you engaging potential investors pre-LOI?

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August 07, 2024

by an investor from Washington University in St. Louis - Olin Business School in Ashburn, VA, USA

Post-LOI you are on the clock to get the deal done. The best prep work is done pre-LOI when it comes to potential investors. How have you been keeping them in the loop? Regular email updates? Phone calls or texts? F2F meetings? Nothing until you have terms?

I am talking about LP equity investors. Not partners, key advisers, or someone may sign a personal guarantee on a loan.

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Reply by an investor
from New York University in New York, NY, USA
I think it makes sense to build your investor network from day 1. I'm happy to chat with searchers even if they don't have a deal under review, much less under LOI. Good to have an intro so you can start building rapport and get a sense of what investors are looking for, plus some investors (including me) are happy to look at deals pre-LOI and give feedback. There is a lot of available support in this ecosystem so take advantage of it throughout your process. In terms of form - I like a live intro conf call, then can just touch base via emails until makes sense for further discussions.
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Reply by a searcher
in Chicago, IL, USA
Pre-LOI, a face to face would be nice, maybe meeting at a happy hour or even a Zoom meeting. The main thing is to come off as earnest, honest, and willing to roll up your sleeves. Most MBA-types have no idea what running a business actually takes, which is fine, but my read on potential investments is the economics will need to make sense, but pre-LOI it's all about whether or not I think you can pull off what your goals are – and clearly articulate them.

An investment thesis and a one sheeter are good follow up.
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