How to Find Investors: Start Your Business off on the Right Foot
You may have thought of a business idea that is brimming with potential, but the hard truth is that your vision is only one part of the equation. To turn your dreams into reality you need funds. And that means attracting investors.
Investment opportunities can come from different places, and you need to be ready. You also need to know how to look for them – different sources of funding increase your chances of success.
By looking at various sources of investments and the tricks that can help you seal the deal, you’ll have a better idea of how to find investors and seize your moment. It’s a long road, but you can get there.
An Angel Investor Can Be a Godsend
Although there are several ways you could potentially acquire funds for your business, two popular choices are angel investors and venture capitalists. Venture capitalists invest other people’s money and work with higher sums. For those reasons, they are not always open to working with start-ups and tend to look for businesses which have progressed further.
On the other hand, angel investors can be just the ticket when you’re starting out. Simply put, they are well-off persons who invest their own money into small businesses. And they do so at an early stage. In addition, they can also contribute with advice and business expertise.
Now, it doesn’t matter if you’re hoping to work with an individual or an angel investment network, there are several things they will always look for. Of course, the first one is the potential to see a solid return on their investment. You will also need a detailed business plan – financial projections, marketing strategies, etc. Finally, they want to see that you have a good team of people in place who can carry out those plans successfully.
If you have them, you will actually need to meet angel investors. Here, you have two choices. One is to contact them through online platforms like AngelList, Gust, or EBAN. The other is to attend industry events in person. Once again, the internet can help you find these. Just remember, you have much better odds of getting funds from local investors.
Once you get a meeting with an angel investor, do your due diligence, research their previous investments and show them why you are a good fit, but try to connect with them on a personal level, as well.
Crowdfunding: Turn to the Community
When you don’t want (or can’t get) a single investor to give you the funds you need, crowdfunding represents a viable alternative. This way, you can raise money for an idea or venture by having many people invest small amounts. In return, they get rewards or equity.
It is great for newcomers as they can circumvent the usual channels and go straight to the people. It will also immediately show them if their idea has merit. But it also works for existing companies. The business can grow while the supporters can look to the company’s track record for reassurance.
Seeing as this idea has gained a lot of popularity in recent years, it’s no surprise there are quite a few platforms out there which allow you to set up your crowdfunding campaign. Nonetheless, Kickstarter and Indiegogo are definitely among the most popular ones. They have their differences, but both are solid choices in this case.
Regardless of which platform you opt for, there are some universal hints to help get your campaign off the ground.
Have an Enticing Idea
Attract investors by having a catchy project. Use a brief sales pitch and have visually-appealing material to accompany it.
Have Different Investment Levels
Make it so that different people can feel comfortable with the amount of money they give.
Have Good Rewards
People want to feel like they’re getting their money’s worth so make sure you provide that sensation.
Online Platforms Are Here to Help
The internet has made it easier than ever to launch your business and market it. As such, it is invaluable in finding investors. Whether you need seed money to get started or want to find venture capitalists to give you the cash injection to take your business to the next level, the internet can help you get there.
We’ve already mentioned three different angel investment platforms. In addition, you have the two stalwarts of the online business world – Facebook and LinkedIn. Then, there are options such as VentureSeek or BusinessPartners.
The advantages of using online platforms to attract investors are clear – you open up countless new opportunities, and you do not need a middleman for introductions. On the other hand, not all online platforms are available in every location, and the competition is fierce.
When it’s time to start searching for investors this way, make sure you already have an online presence. This will be the first step in drawing their interest. Also, focus on online networks which are popular in your location – for this, you can consult with other local entrepreneurs. Finally, ensure the presentation material you upload to your platform of choice is top-notch. Don’t be afraid to ask for outside help in this regard – a touched-up business plan can make a world of difference.
Expand Your Own Network and Use It
When you’re on the hunt for investors, your personal connections can play a key role. Members of your network can serve as investors, or they can help introduce you to the right people.
In general, individuals from three groups will make up your network:
- Acquaintances from School
- Professional Contacts
- Friends and Family
You need to treat each group differently. Business associates will care about data and figures while family members care more about you. A word of warning though – be careful about getting friends and family as investors. You will be more motivated because you don’t want to let them down, but if your idea does not pan out, you can lose more than money.
In the end, it does not matter if they are intermediaries or potential investors – you need to leverage your network and use the connections you’ve made.
Look for an Incubator
Starting a business venture is tough, but you do not need to do it alone. This is where business incubators come in. These organizations help startup companies get off the ground by providing them resources (such as office space), mentorship, and support in day-to-day tasks.
Being a part of an incubator has clear and numerous benefits for your fledgling business:
Simply by providing you with fully-equipped office space, an incubator can help cut down your initial costs by a very significant amount. And the proper workspace is frequently key to the success of a venture – it is very complicated to run a business without one.
Experienced mentors are the core of an incubator. They are there to give the young entrepreneurs concrete advice – from finances to legal guidance and everything in between. They speak from personal experience and are invaluable for their knowledge.
Help with Funding
This is the most important benefit from the point of view of this text. Incubators can offer new companies a range of funding opportunities through their networks.
While it is true that the United States leads the way in this regard, Europe is catching up with incubators such as hubraum or CERN BIC. The availability will vary depending on your location and the industry you’re in, but it is well worth looking into the possibilities.
Get Used to the Word “No”
Don’t expect the first investor you approach to sign you a cheque. Odds are, you’ll get rejected a lot before you actually get to see some cash.
Therefore, it’s important to cast your net wide and avoid relying on a single potential investor. Also, you need to avoid getting discouraged – your idea may not appeal to every investor, but that doesn’t mean it can’t succeed. Finally, use each failed attempt as a learning opportunity – those problematic questions will be easier the next time around.
Have an Elevator Pitch
You never know when you might meet a potential investor, so you need to be prepared. That means you need an elevator pitch at the ready.
Practice how to summarize your business idea in no more than a minute or two. Focus on what you do, what problems you solve, and what makes you different. Don’t try to close the deal on the spot. This is just the first step, but it is a crucial one.
Final Thoughts on How to Find Investors
Finding the right investor isn’t easy. Look online for help, attend events, utilize your network, and remember that it’s unlikely you’ll get the funding right away. But most importantly, have a clear business plan you can summarize and present in a short amount of time.
Follow these tips and you’ll be on your way to funding your idea.
Meta Description: Do you have a business idea and need to know how to find investors to bring it to life? With these tips, you’ll be closer to getting the resources you need.