Investors will be needed to help you get the startup capital that your venture needs unless you are one of those few who can afford it. Navigating those waters is a challenge that requires both humility and a bit of knowledge.
No matter if you are planning to take a traditional or modern route, startups always move at a fast pace. Successful business plans must focus on innovation, growth, and scalability, all in an effort to become the new Google or Uber. They require fast money-raising methods, so get creative when looking for capital.
How to overcome that daunting startup task.
Embrace failure
Accept that most investors won’t be interested in your startup. It may take 100 presentations before you receive your first check. You can’t pitch the same thing to 100 different companies. Know who you are pitching to and do your research. As you would tailor your resume, you should also make sure that each pitch is tailored to the individual you are selling to.
Some general principles apply to great pitches. Prepare to impress a potential investor by adding some extras.
- Use visuals. Use screenshots or prototypes when launching a website or app to grab their attention.
- Tell a tale. Storytelling is the latest trend in marketing. If you can frame your pitch using a problem-solution scenario, then you are on the right path.
- Tell the investor exactly what you plan to do with the money.
- Make bold claims as long as they are true. You’re offering a product that has never been seen before. Show it! Although “for the very first time” and similar phrases may seem exaggerated, they will attract attention.
Network, network
Local networking events are a great way to meet potential investors and other business leaders who can refer you. Find out who will be attending your local networking event so you can plan. Find an event to attend if you need some inspiration.
- By contacting your local Chamber of Commerce. These associations, even if you are not a member, can give you valuable information about events in your area.
- On Meetup or Eventbrite. These websites aim to bring people with similar interests together. Find networking events in your industry.
- Pitch contests are a great way to secure funding. This is a great way to get financing. There are real investors, a panel, and eligibility rules. You’ve probably heard of Shark Tank… The concept is the same.
Beware of those who offer to introduce you to someone with money in exchange for a percentage or equity of the sales. These people are scammers. Be cautious and use common sense.
Connect with investors online.
If you are in doubt, you can always turn to the Web. It is full of resources that will help you get the funding you require as long as you know where to search:
- AngelList has everything you need to start a business: find a job, ask for help, and raise money. Registering on the site allows investors and innovators to explore what is available. Make it easy to find your service when you create your profile. Share this with your professional and personal contacts. You can search for investors by market or deal size.
- CrunchBase works in a similar way to AngelList. It connects innovative businesses with investors from around the world.
- CapRally is “your full-time fundraiser assistant.” All from one site, you can find investors, track capital, and analyze data. Subscription fees may apply.
These sites can be very powerful, but they won’t get you all the funding that you need. The best investments come from direct contact. Combining techniques will help you earn the money you need.
Think Strategically
You may be tempted to spread your net wide to attract investors, but you should first formulate a strategy before embarking on the fundraising journey. You can use sites like AngelList for an outline. You can rely on other entrepreneurs to help you with your search and to introduce you to new connections. Organize as many introductions through common contacts as possible. Consider how much more likely it is that a business will hire a candidate whom a friend has referred.
When a mutual contact agrees to an introduction, you can refine your elevator speech. Include a blurb of 3-4 sentences about your business in the message. You can prove you are not just cold-emailing a bunch of companies by customizing your message. “Once I learned about your involvement in Project X and your investment in Company Y, I felt I needed to introduce myself.”
Make yourself Marketable
You need to learn how to be desirable if you want to get “yes” responses instead of “no.” Get your name in front of potential investors.
Volunteer to write for a technology blog if you want to raise money for a startup. You can start conversations on Quora or become a thought leader.
Crowdfund
The young and tech-savvy are fond of crowdfunding. Connect with those who value your product, whether they are benevolent businessmen or the general public.
Do your research to find out which crowdfunding sites offer the best incentives for investors. For example, Kickstarter and Indiegogo appeal to the public to be part of the “next great thing,” while sites like RocketHub are geared towards philanthropists.
Whatever outlet you choose, ensure it is aligned with your professional goals.
Take the traditional route.
Startup funding can be anything from unique to absurd. But sometimes, it’s nice to rely on a traditional method. Small Business Administration is a great place to start looking for funding, particularly since the government still offers incentives to encourage economic growth. This is where you should start if you are looking for a grant or loan for your small business. You don’t have to worry that someone will ask for a claim later on.
Brick-and-mortar banks can also provide you with an additional financial boost without much hassle. These institutions are not meant to give you a $15 million check. They’re there to help supplement your capital and not to replace it. Speak to your local bank about the available small business loans.