6 Ways to Find Investors for Your Startup
So, you have an idea that you believe can change the world. Just because you have the idea doesn’t mean anything in the world has changed, though. To make an impact, you need to put work into it, watch it grow, and most of all, you need to make money.
Without capital to fund your idea, you’ll never be able to turn it into a reality (or it will be really difficult). It can only ever go as far as the amount of money backing it, after all. Yet, finding investors, loans, or others to fund your idea can take more work than actually making it a reality.
The amount of capital you raise determines how many people you can bring onto your team to work with you. It determines whether you can afford office space and the amount of money you have determines how much time you have to complete a project. Everything in the business world comes down to one thing: money.
It doesn’t matter if you’re a small start-up company or a mega-corporation; you can never have enough cash. Keep reading below to learn how to raise as much of it as you need to start your company!
1. Investors Invest in Ideas, People, and You
To attract investors, you need to think like an investor. Pretend like you could have anything in the world; what would you want? Investors don’t make purchases with the same logic as a consumer. Instead, everything they spend money on comes down to a simple motivation: making more money.
You should strive to make your company seem like something that would make investors more money than what they already have. Luckily, there are several ways to do this.
First, you could pitch your idea as something that will innately make money. Just saying that it will change the world isn’t enough; tons of things change the world and never make a dime. Instead, you should frame your idea in the same way you would a budget. Illustrate the income that could come from it first and foremost.
If pitching your idea itself doesn’t work, then you could pitch your own abilities. Have confidence in yourself as a company leader — it does more than just impress potential investors. It convinces them that it doesn’t matter what the idea is since a good company leader can make anything turn a profit.
Target Both Individuals and Firms
When you begin seeking funding for your business idea, you should make a list of potential sources of capital. The list doesn’t need to be limited to firms or organizations, though. There are services out now that help you target specific individuals who may be interested in helping you turn your idea into a reality.
For example, there are websites that facilitate connections between new companies and potential investors. Websites like Crunchbase may connect you to people like Benjamin Breier, Mark Cuban, or even Elon Musk!
2. Bank on the Bank to Help You Out
If you’re having trouble convincing investors that you’re worth taking a risk on, you may just need to demonstrate that you’re capable of running a business. To do that though, you need a business to run. That’s where traditional lending sources can help.
If you ask for a small loan from a trustworthy bank, you’ll have the startup capital to illustrate what you can do. While the money you get from a bank loan should go right into your company, you should always be aware that it’s not what you’ll use to turn a profit. Its purpose isn’t to build your company — it’s purpose is to actually enable you to convince investors.
Once they have hard data showing that you know how to turn a profit from a small loan, they’ll be more confident investing in you. Once you have capital from investors, you’ll be able to actually focus on building your business.
3. Crowdfunding Does More Than Just Raise Funds
In the age of the internet, there are many creative ways to raise funds for your business. One of those is to simply ask the whole internet at once for help to turn your idea into a reality — to crowdfund your idea. And for that, there are websites like Indiegogo, Kickstarter, or a variety of others.
Some of these websites cater to many different kinds of people with many kinds of ideas. And if you decide to try to attract people on platforms that cater to the general public, you may find it hard to build an audience. Yet, if you do manage to find an audience on those websites, you’re almost guaranteed to find the capital you need.
To guarantee that your idea will resonate with someone crowd of people, you should advertise on crowdfunding websites catering to specific niches. For example, if you’re a UK-based business, you should consider advertising on SyndicateWorld instead of Kickstarter.
The website focuses on UK businesses, guaranteeing that businesses will resonate with investors. And there are several other crowdfunding platforms that cater to specific niches that you can take advantage of!
Kickstart Your Marketing Campaign
A fringe benefit of using a crowdfunding platform to find capital is that the help you start your marketing campaign. To make a good crowdfunding campaign, you need to offer tiered rewards and release regular updates on your projects. All the work you put in to find an audience who will fund you will also generate hype.
The hype you get from seeking funds will help your company succeed. It’ll make creating a long-term marketing strategy easy, and you’ll have a guaranteed client-base before your company even gets out of the gate.
4. Work Your Network
You’re never alone — especially not when you’re trying to start a company! People are always around who will want to help you, and all you need to do is reach out to them. That’s what your personal and professional networks are for; you have them so that you can use them when you need them.
You never know when a colleague may have a friend who may be interested in a business. A family member may work for a company that routinely invests in small businesses. You never know what you may find when you search for investors in your networks.
Don’t Only Depend on Your Professional Network
One of the biggest mistakes you can make when asking around about investment opportunities is to only use your professional network. While you may have more of a chance of finding an investor in your professional network, there’s still a small chance you can find one in your personal ones.
Let your friends and family know that you’re starting a business and are on the lookout for investors! You never know when they may be able to help.
5. Venture Capital is Changing
There was a time when start-up companies could find venture capital anywhere. People were excited to see how people could develop new technologies and investors wanted to see the ideas people could come up with. Now, that’s changed.
While venture capital hasn’t totally dried up, it has slowed down recently. After peaking at $80 million in median fund sizes, investors are pulling back a bit on how much they’re willing to hand new companies money. Instead, they’re preferring companies to put more work into demonstrating their capability without investor help.
That doesn’t mean investors aren’t still adventurous! Once you prove that your company has exciting potential behind it, investors will still want to come along for the ride to the top!
6. Accreditation is More Valuable than Money
While investor capital isn’t like taking out a loan, it can still jeopardize your company if you get it from the wrong people. It’s rare to be handed a lump sum of a few million dollars to ruse right away. Instead, investor capital is usually paid out in increments, and the investor agrees to give you a certain amount over time according to your valuation.
Just because they agree to give you a certain amount of capital today doesn’t mean they’ll have enough for it tomorrow. Investors can go bankrupt, too.
Luckily, the US SEC has developed an accreditation system to allow new companies to check if their investors are legitimate. To be accredited as an investor by the SEC, they need to make at least $200,000 on their own and demonstrate that they’re on track to do it again.
That way, you can be confident that your investor won’t run out of capital when you need it most. Going with an accredited investor will give your company some stability, and that can be invaluable for new companies.
Investors Want You to Show You Can Lead
The best way to demonstrate your effectiveness as a leader is to just meet with investors in the first place. When you meet with investors, you demonstrate that you can take initiative and truly lead your company to success. It shows that you have the drive to succeed, and that’s what investors want to see.
It assures them that you’re at least as committed to your company as they will be. It’s risky to invest in a company, and your job is to mitigate that risk by demonstrating your capability as a leader. It takes a lot of work though and you may need to sacrifice some parts of your lifestyle to be successful.
Yet, you don’t have to. Keep reading here, and you’ll learn how to manage your personal life and your professional one as you try to get your startup company off the ground!