Raising funds for your SaaS startup is challenging. It could drain your energy and time.

Running short of funds is one of the primary reasons why startups fail to take off.

But with the right strategies, you can easily attract the perfect investors and get that crucial financial push to take your startup ahead.

In this blog, we’ll share proven strategies that helped startups, like yours, attract investors and raise fund faster.

Let’s dive right in.

What convinces an investor?

Approaching an investor is tricky. You may not have a clear picture about how your investors perceive your business. But these actionable steps can actually help you convince them.

1. Showing results first

Investors look for results. They will only think about what's in it for them. You will need to answer this crucial question by showing the result of your work.

For example, if you’ve developed an MVP and are looking for additional cash influx, you will need to get some traction before approaching investors for the next funding round.

2. User engagement

Launch a test product with minimum features. Present its user response to the the potential investors. This will help inventors assess your product’s future to a certain extent. Here, you can share the positive as well negative feedback you’ve received from early adopters.

3. Embrace originality

When you plan to develop a SaaS of your own, research thoroughly and come up with a unique idea.

Show your investors the uniqueness of your solution compared to others. The product you create must offer the customer a simple fix for their issues.

Make it a goal to understand the challenges of the customer and offer a solution because investors prefer quick fixes that are market-challenging and current.

Usability can be improved and a large customer base can be attracted by having distinctive, straightforward features that are user-friendly and consistent in design.

Customers' needs and requirements for the solution should be the main focus.

6 Top strategies to attract investors

Here are a few proven strategies to attract potential investors to your business that is going to hit the market once it is completed.

1. Develop a unique business plan

Documenting a business plan in the crucial part of any business. The plan should clearly show your investors why they should invest in your business.

The key elements for a business plan are:

  • Chart the competitor analysis
  • Market size and comparison
  • Collect consumer feedback to validate your idea
  • Financial plan
  • Development plan
  • Business valuation

Present an overall view about the product or the service you are going to launch in the market.

The investors tend to look for the field they are familiar and experienced in. So, making your plan simple, providing ample amount of information can make them invest in your business.

Obscurity in your business plan can turn down the potential investors accepting a deal with you. Bring in the expert team to respond to the queries raised from the investors.

Discuss the respective areas that need the investment like building SaaS, pricing, promotion and distribution.

You can refer to the top 15 profitable software startup Ideas to get your unique business idea.

2. Build an expert team

Having a team of skilled professionals by your side is an additional benefit  to bring investors to your business.

When you explain or demonstrate the business idea to your investor, there are chances of raising queries related to the business stand in the market.

Build an expert team that would have in-depth knowledge about your business and can clarify the questions and the doubts raised.

3. Find the right investors

First identify the type of investor you are looking for. Determine if you are seeking partial financial assistance or funding for the whole project.

Some investors assist you to begin the project, whereas others give during the final stage. Make a detailed research and list out the assumption of your market expenditure. This can let the investors figure out the estimates and authenticity of the SaaS idea presented.

Read on, If you are looking for methods to find the right investor for your project.

4. Soft selling via networking

Networking is a possibly large platform to net your potential investors. Soft-selling through networking is a simple method.

Through networking you can develop connections with people similar to your business and you can introduce your SaaS product in the right space.

5. Complying with a dividend paying stock

Propose a dividend-paying stock to your investors. This would be one better choice to convince them as it employs cash flow and adheres to a good relationship.

Presenting your quick profits and sharing a dividend amount can attract investors to your business faster.

Be consistent on returning the dividend payment and it will be a coherent evidence that your business is worth investing in. This also develops a long-term relationship profiting both the company and the investors.

6. Offering attractive ownership

Investors just don’t pay you, but they expect some positive return of investment.

Sharing a small stake of your company with the investors in exchange for a large sum of money can be an unfavourable deal.This might even turn down their interest.

Discuss the business idea with your investors, if they are expertise in your choice of field then they can give you tips for your business progress.

When you have found your ideal investor, make sure to discuss the dealing clearly to avoid trouble later.

Make it a priority to consult a legal advisor before agreeing to sign the deal. Transparency should be maintained from both sides.

Where to meet investors?

If you are beginning a small business try with your friends, family or mutual contacts. There are private investors where you can earn the expected amount for your project.

The best way to land at the ideal place of investors is by

  • Connecting through networking events
  • Community organisations
  • Via LinkedIn and relatable networking platforms

How do you attract investors' attention?

  • Prepare a clear and convincing business plan
  • Have a team of experts
  • Focus on scalability
  • Promise dividend payment if possible
  • Share your customer feedback
  • Build an effective marketing plan

Factors to consider when gaining investors’ trust

Consistency and transparency

When you become a well-built company, the expected response from investors is a transparent communication and discussion about the business growth.

Transparency in communication would develop a firm interest and trust to invest more in extension or expansion of your company.

Consistency in paying the dividend stock and sharing statistics on your business to the investors will show them the level of growth and it charges their trust for you.

Follow social, governance and business standards

There are different policies that investors consider while choosing to invest in your company. Some investors compare with the market statistics to choose the best business firm.

One of the factors is the culture followed inside the company. They monitor the social connections maintained between the employees and customers.

Moreover, investors screen the leadership skills, the workforce employed in the development and the growth of the company in the market.

Instill innovation

Investors look for innovative products in the market. They also expect your proposed SaaS idea to hit the market adapting to modern technological changes.

The possibility of future development attracts investors in particular with respect to present market trends.

They depend on the company's ability to swiftly respond, redesign, and broaden while keeping up with competition.

Investors shake hands with challenging companies that adapt to new technologies like Artificial Intelligence, digital automation, app development and software services.

Conclusion

Aiming to launch a big SaaS business in a large market space requires diligent work.

Planning a definite and progressive software project till finding an ideal investor is a real big deal and it necessitates thorough research.

Reaching out a potential investor is the key to a successful business. An ideal investor embraces the company towards growth succeeding in long-term relationships.

On the whole you will find an ideal investor when you make a perfect agreement with the investment, sharing a dividend-payment in respect to the business growth.

Trying to find a software service? Get a free consultation from our experts now.

Bonus FAQ

1. How to sell business ideas to investors?

Here are 7 tips to sell your business idea.

  • Find the best investor
  • Define a problem
  • Build a pitch deck
  • Tell a compelling story
  • Show a prototype and your realistic future projections
  • Make a deal
  • Maintain a good relationship with your investors

2. How do I reach out to investors?

These tips will help you to reach your potential investors.

  • Create a concise plan
  • Generate your product’s value
  • Tell a compelling story
  • Explain the need of fund
  • Give proof of traction
  • Seek permission to send more information

3. How to attract venture capital?

You will need to attract the suitable venture capital if you want to experience success as a business.

  • Find a venture capitalist that supports your values
  • Share your success story
  • Create a winning pitch
  • Join a start-up accelerator

4. How to seek investors for your business?

These steps might help you choose your investors.

  • Search via LinkedIn to identify potential investors with shared passions
  • Expand your network
  • Meet the investors
  • Explore crowdfunding and brand building opportunities