Statistics say that most businesses fail by their fifth birthdays, not because they were based on bad ideas or because of bad business environments, but rather because of inadequate funding. You need capital for your business to hit the ground running. So if you want to actualize your entrepreneurial idea, first think about how you’ll fund it, and then be strategic about how you find potential investors.
This piece will describe how to catch the attention of big investors, get them to dine with you, agree to fund your business, and turn your idea into a reality.
Understand Exactly What Investors Want
If you believe the only way to grow your company is through professional investors, then be sure to determine how interested your potential backers are in your budding enterprise.
You need to tactfully show that your company is on its way to an astounding liquidity event, where everyone who is financing you gets a good return. Because not every business will go down that path, many investors prefer using the portfolio approach, where risk is spread out among several partners.
Criteria Used by Investors to Assess Your Company’s Potential
- Does the firm’s brand address a broader and rising market need?
- Can the executive team deliver powerful marketing, advertising, and branding capabilities?
- Does the company possess a justifiable competitive advantage?
- Can the business rise fast enough to leverage that market opportunity?
Risks must be counteracted with potential rewards that are achievable when your business experiences liquidity events. If you need huge amounts of capital, you’ll have to show that your firm has rocket-ship growth capabilities.
Look for a Perfect Fit and Make Lasting Connections
If your company goals meet the four requirements, the next task is to draw up a list of potential investors who might be interested in your company. Keep in mind that modern private firm equity markets are extremely fragmented, and start-ups that incorporate advanced document scanning and filing have slightly elevated the venture capital.
So how do you choose people who are the right fit for your business? Start by establishing lasting connections and building significant relationships even before setting out to acquire funds. These interactions will assist you in identifying potential investors around you.
When networking, you should look for professionals in businesses that are similar to your own. Your main goal should be targeting people (and even large companies) who would appreciate the opportunities in your company. You can also research the original backers of businesses similar to yours. This process will educate you on the procedures business owners implemented to make money in your sphere of interest.
Share Your Vision
After you’ve made connections with people who understand your company’s structure, targets, and brand, you need to communicate your vision to them. As an entrepreneur, it’s imperative to find potential investors who believe in the goals you’ve made for your company. If you fail to communicate your objectives, investors will not wish to partner with you.
The internet has several websites dedicated to providing assistance to entrepreneurs who would like to explore the investment community. Simply find the best ones and get all the investment tips you need. Your dreams are always achievable as long as you adopt insightful strategies.
Tips on How to Find Potential Investors
Many venture capitalists receive multiple pitches every day and have limited amounts of time. Yet as a new entrepreneur, you might need to talk to more than fifty investors before one of them makes a funding decision. It’s therefore crucial that you learn how to effectively convince the investors to accept your idea.
Fortunately, many resources are now available to guide you not only to find excellent investors but also to meet them. The following tricks will help you reach out to the right people.
1. Build an Attractive Profile
An ideal way to connect with potential investors is to create an attractive online profile. It should contain your company info, team members, and products or services. Including this information will make it easier for interested parties to find you. Also share your profile with friends and professional acquaintances and be sure to request references from them. When more individuals follow your company, its visibility will increase and many more people will learn about it.
2. Comb Your Networks
Since investors receive multiple pitches, they always favor those firms that have common introductory contacts. After coming up with a comprehensive list of investors you’d love to meet with, read it through person-by-person and see if you and the investors share any mutual acquaintances. If so, fantastic!
But before asking for introductions, see if your contact can meet your investor first and explain how splendid your business is. Your contact should imply that he/she is doing a great favor to the investor by introducing your company.
3. Tactfully Craft a Unique Introduction
Of course, you’ll have to find introductions to some credible investors. When you have those opportunities, you need to be more creative and careful about your outreach. Make sure that you formulate emails that will catch the attention of investors.
Don’t send cold messages! Convincing venture capitalists isn’t that simple. You have to be artistic and ingenious with your introductions.
4. Give Investors Enough Reasons to Look For You
As much as you’d like to find powerful investors, investors also want to find incredible companies. You should ensure that you spend sufficient time making yourself visible to people who want to find you. Even if you’re equipped with the finest fundraising tactics, be prepared to be rejected.
Don’t let rejection dishearten you, but also be diligent to pursue prospective financiers in a professional manner. If you don’t receive a response in one week, send a quick follow-up. Then contact them whenever you have something important to share, such as product launching, commitments from prospect investors, and key metrics.
The Bottom Line
As you’re considering a new business idea, ask yourself why investors would fund a company devoid of flavor. Think big. Don’t neglect the basics. Actualize the above tips, and you’ll see investors flocking your way for a chance to work with you. Adore mastery. Exude passion and shatter your limits!