I was always amazed at how eager people strive to take money from investors. Personally, I am not a big fan of this kind of business financing. But more on that later.
Despite my (personal) attitude towards investor capital, I understand that for some business ideas nothing shines without it.
After all, it happens that you need much more money to start and scale up a business than you can actually invest yourself. In this case, you can not do without additional capital. One of the sources of financing is investors who are willing to invest in a promising business.
Having a viable business plan for your startup and a concrete understanding of the amount of financial assistance needed (and what it will do), you can begin to search for investors.
This process is quite scary for many, so I will share with you a few tips that will help you get the necessary funding.
9 tips for finding an investor for a startup
Find suitable investors
Not all investors are the same. The only thing that unites them is the presence of capital, which they want to increase. But otherwise, each investor or investment fund is completely different.
It is important to understand who is the right investor for your business.
Decide on the desired scale of investment for your business. How about a business incubator? Are you going to go through the program in the accelerator? What type of investor do you need: a business angel or an institutional investor?
Look for those who have experience and expertise in working with similar projects.
Create a strategic list of investors you would like to meet
Given the fact that hardly every meeting will lead to investments, your desire to expand your search to the maximum will be fully justified.
It will be best to focus your efforts on a narrow circle. Include 30-50 investors on your list.
Let me explain why: recently in the USA, half a million people have become business angels. Think about the number – 500,000 people. If you don’t need extra chores, and you value your time, start small. Narrow your search to an adequate minimum. Moreover, at any time you can increase this list.
I recommend starting with the platforms I mentioned above (AngelList and CrunchBase) in order to find people who invested in companies similar to yours, who, however, do not compete directly with you (investors do not simultaneously invest in companies that compete with each other).
Take this list and discuss it with other entrepreneurs who have experience in attracting investments. They can be found on social networks (Facebook, LinkedIn) or in the same place, on AngelList.
Consult who else can be added to the list, and who is better to remove. Their experience is an invaluable resource that will help you identify potentially interested investors who are not yet on your radar.
With their help, you can also identify investors who are difficult to work with or who are better to avoid altogether.
As a result, you will receive a list of approximately forty investors with whom you would really be useful to meet.
I recommend compiling a summary table of potential investors and include the following points in it:
- investment fund name or investor name;
- communication you know (circle of his communication);
- past investments;
- your common ground and more.
In this table you can include everything that is somehow important to you at the stage of preparation for the meeting and in the upcoming negotiations.
Such an electronic “cheat sheet” will become for you something like an organizer that will help you navigate in the maelstrom of meetings and discussions. You will not forget what your conversation with a specific investor stopped at, with whom you need to contact and what to send to whom.