How to Find Investors for Your Business

9 Min Read

Proper funding is one of the core factors of running a successful business. Unfortunately, many startups lack enough funds to help run their operations smoothly. If you are one such entrepreneur, there are a host of ways that you can use to draw investors to your company. Keep reading to find out where you can secure your business some money and find investors for your business.

8 Tips to Find Investors for Your Business

There are multiple ways to find investors for your business.  The one (or several) you choose is really up to your and your business structure.  These are just a few ideas to inspire you while you seek funding to keep your business thriving and growing.

  1. Crowdfunding Platforms

Crowdfunding allows you to get online funding via centralized financial platforms. Millions of people invest in startups through crowdfunding platforms. They serve as the meeting point of entrepreneurs and investors. Here are some of the types of crowdfunding platforms:

Equity Crowdfunding

Investors buy a stake in your business with hopes of getting a cut of the profits if the venture picks up well. It is risky as the investors may lose their equity stakes if the company falls.

Reward-Based Crowdfunding

Under this type of funding, you will ask investors to contribute little cash in exchange for a reward once your business is running. For instance, if you are launching a sneaker company, you can promise to give each contributor who pledges $500 a free sneaker when the shoes debut 12 months from now. When the shoe launches, the retail price will be $ 800; hence, you save the investor money through an affordable price tag.

Donation Crowdfunding

Donors contribute any amount of money they wish to your venture. They do not expect you to reimburse the money once the business breaks even. Donation crowdfunding is primarily used for non-profit and charitable ventures. A prime example of this funding is GoFundMe. You can also opt to use a church management software if you need to facilitate long-term crowdfunding for a non-profit organization. This is a multi-platform tool that not only keeps track of charitable donations, but also allows you to retain investor/donator information for future fundraising events.

Debt-based crowdfunding

It is also known as peer-to-peer lending, where investors match with businesses seeking funding. Start by filling an online application file and getting a credit rating from a firm that provides peer-to-peer services. Investors use the credit score to determine your business eligibility for a loan. You will have to remit monthly payments with interest to the investors.

  1. Seek Capital from Family and Friends

It is the easiest and fastest way of securing funds for your business. Reach out to your family members and friends and ask them to chip into your startup. They can fund the business by making donations, partnering up, or giving you soft loans with flexible repayment plans. Partnering up is the safest bet because you will not be repaying the money.

Avoid a casual approach when facing friends and family. Arm yourself with a proper pitch, complete with an elaborate business plan to convince your target investors easily. The disadvantage of this method is mixing business with pleasure due to familiarity, or if the venture fails, your relationship with your relatives will be strained.

  1. Social Media

Social media is vital for the marketing of your products and offers a way of securing funds. You can partner with influencers or use sponsored ads to raise investor interest in your company. Direct messaging is practical, too; identify the profiles and handles of investors that suit your startup and send them a direct message. Use sites like Facebook, Twitter, and LinkedIn to network.

  1. Contact Schools and Businesses in Your Niche

There are high chances that you are in touch with various people in the same trade as you. Reach out to them and see whether they may have some recommendations on potential investors who may be interested in funding your business. Attend many events to network with fellow industry players; through this, you can land an investor.

Aside from degrees, diplomas, and certificates, schools offer a great way of meeting people of similar interests. Professors invite captains of the industry and other bigwigs to speak with the students. You can meet the professors and request them to help you set up an introductory meeting with the industry giants; you may be able to get one on board.

  1. Small Business Administration (SBA)

The SBA is a government agency meant to help alleviate small businesses. It does not offer direct loans to entrepreneurs; rather, it acts as a guarantor for firms to secure commercial bank loans.

According to the agency, startups have to supply at least a third of the capital required. Your personal or business assets should guarantee the remainder of the capital. Only certified lenders can work with the SBA, and approval takes a week or longer.

  1. Private Investors

These are capitalists who invest in your business in exchange for shares that cannot be traded publicly. Let’s look at the two main types of private investors:

Angel Investors

Angel investors are high-flying people who have adequate resources, connections, and money to make a business successful. They have to ascertain whether the company is worth their investment and the venture’s return on interest. Normally angel investors come aboard solely. Unlike venture capitalists, angel investors put their money in startups and grow together. They have a say in the day-to-day running of the company.

Venture Capitalists

Venture capitalists are professionals who are tasked to invest clients’ money in businesses. They largely do not invest in startups, but if your idea stands out, they will gladly put money in it, ensuring your startup is a combination of market opportunity, product opportunity, and competent management to stand out. Venture capitalists have more money to invest when compared to angel capitalists. They will own equity in the organization and participate in decision-making.

  1. Apply to Accelerators

Accelerator programs offer you an opportunity to get business advice, meet similar entrepreneurs, and a modest check on your work. Take advantage of the demo day to pitch a killer business plan to the investors.

  1. Blogging

Blogging is an excellent way of showing your business’s progress. You can guest post on the blogs of your target investor and try to engage them in the comment section to draw their attention. Alternatively, you can write blogs on your own website to demonstrate authority and expertise for visitors.

How do Investors evaluate a Business?

Investors look into a bunch of factors before deciding to put money in a business. Here are some of the common factors they look at:

  • The uniqueness of a product or idea
  • Business plan (it must have market analysis and a product execution plan)
  • A competent management team
  • Company’s financial data like profit made, total expenses, and financial projections
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