They say money can't buy you happiness, but it certainly can help you scale your business, which is close to happiness.
Every startup needs investments to build itself, and finding ways to increase your capital is a task on its own. At the beginning stages of your startup, money can be arranged a bit more easily from acquaintances and as loans, but with each passing day, your business grows, and you will need to find ample sources of investments.
38% of startups fail because they couldn't raise enough money to match their growth.
Finding investors is not easy, but we can give you pointers on how to find them. You can choose your best mode of action from the options in this blog. Let's dive right in.
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When looking to find the right investor, it's rare, but you could start your search around your family tree. You can reach out to your family through a phone call, text or mail and show them what you are working on.
Hey, it's your family, so you will have an idea of how to pitch your business plan in the most convincing way possible for them. If you are lucky, a simple dinner might be enough to get their attention. But even if it's informal, don't forget that you are the CEO, so pitch it as you mean it.
Explain the details of what they are investing in and create a contract that clearly states the terms and conditions of funding. Be honest with them, tell them what they will gain and clarify the repayment terms. In the end, they are your investors, and you are their prospective investment, so act with utmost professionalism.
The critical advantage of friends or family investors is that they might relax a bit on the strings attached to the contracts. Other investors would demand interest rates, partial ownership or a position among the board members.
Angel investors, private investors, accredited investors, and even banks actively participate in online fundraising platforms. The growth in technology has helped them find new investment opportunities online.
Peer-to-peer lending sites that offer business loans to donation-based crowdfunding portals are major platforms.
Crowdfunding is the type of funding in which people invest in exchange for a deliverable. They ask for early access to your product or service in exchange for funding.
New and established businesses can be a good fit for crowdfunding as they would be past the ideation stage or close to the prototyping stage.
Kickstarter and Indiegogo are pretty good sites to gather crowdfunding options. But always remember, you should be able to provide the promised rewards because you and your business's reputation are at stake.
Social events are the traditional yet effective way to get noticed by investors. Techathons, coding marathons or simple, organised networking functions can get you the ticket you want.
You should be fully aware of who will be attending these events and choose your target beforehand.
Be ready for a simple pitch at these functions. Tailor your presentation based on your target investor. Set up meetings and use these events to get the necessary contacts. You can focus not only on tech events but also informal events like sports events or charity fundraiser events. But try not to be the grinch of the party, be subtle about your pitches so that you don't kill the vibe.
4. Social Media
Nowadays, social media is the best friend for a business owner who is trying to explore funding options.
Online platforms are a great way to get the word out about your product or service. If it has the potential, it will catch an investor's eye.
The key part to keep in mind is the platform on which you showcase your product. Market your app/product where your potential investors are present.
Sponsored posts and collaboration with influencers are great ways to post updates about your product. For improved success rates, try to be active on social media.
Everybody posts what they are doing right now on social media, so social media can be the research platform you need to know where your target investor is or will be. Direct messaging is an excellent way to catch the investor eye (try not to spam their DMs).
LinkedIn is a great platform for cold messages and to pass the social proof to message Venture capitalists. You can use Facebook and Instagram to market your product and build relationships to generate trust. Try to follow investors on Twitter to know their insights on various topics so that you can engage in thoughtful conversations.
With the right template and structure, an email can change your life for the better. When thinking of ways to find investors for startups, email is one of the primary ways to connect with angel investors and VCs. Check out some email pitching tipsto write for investors.
In the early stages of business, raising money through accelerator programmes is a good option. Accelerator programs provide a wide variety of resources, but they mainly focus on existing companies and not on profitable ideas.
Accelerator programs vary in the way they operate, and most offer funding to help businesses to grow. But some programs go the extra mile to provide training, access to experts and additional resources for small businesses.
You can find accelerator programs online. They are mostly private and may be conducted by business schools, individuals etc. Before you go for an accelerator program, always check whether the program is right for you. Do a little research.
Take a look at some of the corporate accelerator programs that will help you succeed.
The power of expressing your thoughts and ideas is an underestimated art. By writing a blog, you are giving your views and explaining your life journey. This gives a better understanding of yourself to the people who want to invest in your business.
Blogs also help in attracting inbound attention. There is also another way to attract investor attention; you can comment on their blogs as they regularly check the comments, and you can build a positive relationship with them.
are not a long term solution for you, but this will help you gather some seed funding and the necessary knowledge to scale your business. Incubators are either private or non-profit, targeting small businesses. Most of them won't provide funding but will point you in the right direction or match you with potential partners.
See how Incubators help startups.
Being a business owner, you need to be on the lookout for potential investors, and you need to be ready to pitch them a curveball that swoops them right off their feet.
Before you start finding investors, you should ensure that the following things are set:
Make Sure You Have a Business Plan
A business plan gives the investors an idea of your business model, product, and vision. Investors need to be aware of what they are getting into, and they invest in businesses that they believe can grow to have a high net worth. The right business plan can be your catalyst for your company's growth.
Keep Financial Records in Order
A clean financial record helps an investor understand your capability in money management, and they feel more secure investing in your company.
Be Ready to Say NO!
Not all investors have a heart made of gold; there would be people who would not have your best interest at heart.
Be wary of them and read every document clearly before getting into a deal. If you believe you cannot comply with the offer, tell them your concerns and be ready to reject them if they are not compatible.
Entrepreneurs set up endless meetings, socialise and look for opportunities to scale, all the while sustaining an active business. They are no short of superhumans.
Raising capital for your business is not something that happens in a day. It takes patience and perseverance. The digital era has provided us with many opportunities to find investment around us.
Always be on the prowl to get assets and keep in mind what you learned from this blog.
Not every door is closed; just the wrong ones are. The right door is waiting for your knock.
When you think of finding the right investors for your business, you need to know the vital factors they look for before investing in your startup. Be ready to answer them and never miss out on your opportunities.
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