Starting a business is an exciting time but can also be a challenging one too. The biggest obstacle for entrepreneurs when starting up tends to be funding and many founders opt for investment from venture capital firms, angel investors or crowd funding platforms.
A strong team of investors can be the quality ingredient to make your business a success. But this can be easier said than done and it’s not always easy to find the right investor, offering the right amount of money to get your project off the ground.
Before approaching investors, you need to establish what type of investor you want for your start up. Venture capitalists are a type of private sector finance to help new businesses establish themselves in the market and grow. They tend to be interested in growing markets and disruptor type businesses in technology, FinTech, IT and Biotech.
Angel investors are individuals who personally invest their own money into start ups to help them grow. Many angels invest in industries they are passionate about and can usually offer vast experience and knowledge as well as cash.
Here’s a few things to consider when attracting investors to your start-up…
Perfect Your Deck
Whilst traditional business advisors and the likes of a bank will tell you that an in depth business plan is vital, demonstrating a clear and concise vision onto a deck is far more beneficial when seeking investment. Busy investors don’t have time to read pages and pages of your plan, all they want to know is what the business is, who your market is, how its going to work, and the numbers – all in a simple, easy to understand format.
However, you should still do an in-depth plan for yourself and some investors may see your deck and request further more detailed information later on, but for the purposes of getting their attention and getting them on board, start with a solid and simple deck first.
Approach Them On Social
When approaching investors on social media, try and stand out by engaging in their content and asking them questions first, rather than just messaging them for investment straight away. Show an interest in them first by spending time commenting on their posts and asking them for their opinion on things in their industry of expertise. Not only will if feed their ego, it’ll make them notice you so that when you do eventually message them, they’re more likely to give you the time of day. Approach investors that already have an interest in your industry and don’t waste time with people who have no experience in it.
Proof Of Concept
Whilst new and unique ideas can be interesting to many investors, some investors like to play it safe when it comes to start ups and invest in industries they already know a lot about or have seen growth in businesses similar to your idea. If your idea is based on something similar to an already successful company, use their growth as an example of your start up’s potential. If your start up is a completely new idea, try and find as much data and research into your market and growth predictions of that sector. If your idea is product based, give samples to customer to test and record their feedback. You could also run surveys on social media to prove there is a demand or need for your product/service/idea. The more information you can use to demonstrate your idea will work the better.
Use Crowd Funding Sites
Posting your business on crowd funding sites can be a great way to find investors or raise capital in a short space of time. Some platforms will require you to give investors product samples or discounts in order for them to invest, whilst others will simply get in touch with you if they like your idea and discuss it further. Crowd funding sites are also a great way to test the market and gain ideas and feedback from others.
Find A Partner, Not Just An Investor
Finding a partner that will invest can provide your start up with so much more than just cash. If you’re willing to give away equity to an investor anyway, you’ll get more for your money by partnering up with them too. A great partner can introduce you to the right people in the right places and help grow the business day to day. Whilst all investors want to see a return on their money, a dedicated partner will help grow the company to another level. An experienced partner is great to have as a sounding board and their expertise and knowledge in the industry can often prove even more valuable than the cash they inject. You may even find that the perfect partner for your business is one that doesn’t invest at all.
Key things to things about before approaching investors:
- Know your numbers
- Know your market
- Know your risks
- Know your growth plan
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