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10 Strategies That Will Not Fail Attracting Investors

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Written By Javier Dixon

With the impact COVID-19 is having on the economy, one of the biggest challenges faced by start-ups and growing businesses are flourishing their plans to raise capital.

To begin with, you need to come up with a brilliant idea that is new and fresh to get you noticed in the entrepreneurial world. However, it takes more than a mere idea to get investors to pull out their wallets and put their money and confidence in you. 

First and foremost, where are you to look for financing today?

1. Crowd Funding

Crowdfunding is an effective way to pool money with help of platforms such as Kickstarter and Indiegogo. These platforms allow entrepreneurs to raise money from a large number of investors across the web at a relatively low cost.

For successful crowdfunding, you have to first set up a campaign with the targeted goal for a specific period, then mention the perks vested for investors. For example, $30,000 in 40 days. 

Also, it is important to read through all guidelines mentioned on the crowdfunding sites, as some platforms may have hidden fees or require you to achieve your full goal in order to receive the wholesome amount.

Crowdfunding specifically works to raise small amounts and to get you through the developing stage. After this seeding, you can pitch to investors to obtain a larger capital. 

Most start-ups that require larger capital opts for Angel Investors or Venture Capitalist here I have elaborated a bit to help you understand better. 

2. Angel Investors

Attract Investors Today With These 10 Foolproof StrategiesAngel investors are individuals who contribute to start-ups they tend to find promising. They support start-ups at their initial stages of growth.

As angel investors invest their own money, they usually guide and assist you in your journey to attain success and their experience can save you tons of money. 

To find angels, ask the entrepreneurs in your network or the Angel Capital Association or you could attend the events hosted by these angel investing groups to help you grow your network. 

3. Venture Capitalists 

Venture Capitalists are wealthy individuals who invest in start-ups with a long-term growth perspective. Venture Capitalists as investing larger amounts in business require an in-depth strategic plan. They usually invest in businesses that have already shown little progress.

Also, you should keep in mind the return on investment, venture capitalists expect is 3-4 times more than their actual investment within the first few years.

To best way to get in touch with venture capitalists is through the use of your network, which is your fellow entrepreneurs or investors. Another way is to search through the National Venture Capital Association. 

4. Convertible Debt

Convertible Debt is when a business borrows from an investor with a promise to convert the debt to equity. These investors get a set rate of return every year.

Remember, before approaching your prospective investors with a pitch to support your startup, determine what kind of assistance and how much money you need. Once you have determined all these, you will form an overall idea of the investor’s type you need.  

As an entrepreneur, from nailing the elevator speech to securing funding, motivating potential investors can take a lot of time and effort.  

So how do you make sure those efforts aren’t going in vain?

1. Start with enhancing your network

You never know where you will find a perfect investor for you. Grab the opportunities to attend events, parties, and conferences happening around you. Interact with people, talk about your business idea, give your agenda a good push to engage with people to better understand your workings.

Growing your professional network should always be a goal as an entrepreneur, which might end up with an investor wanting to invest in you. If not, the experience is worth it indeed. 

2. Research the working of your industry

Entrepreneurs are ought to be original about their ideas. Thinking out of the box will keep the odds in their favor as most investors are looking for a business opportunity that stands out.

Although, make sure to research the industry well to know what marketing strategies have worked or failed. Take advantage of your competition and know what worked and what did not work for them. 

Remember, do not forget to highlight what is unique about your product or service for the investors to know their efforts to work with you measures up.

3. Devise a perfect pitch

Attract Investors Today With These 10 Foolproof StrategiesPitch is one of the most nerve-wracking and extensive parts of the investor meeting. It is no secret that storytelling works, but to nail the storytelling pitch, you should include a concise of

  • What is your idea or product?
  • How does it serve the mass?
  • How does it make you stand out?

Create a pitch that leaves a mark. Tell them everything they need to know about your goals, products, and business idea. Connect to Impress. 

You have to persuade the investor to take on your business. Although we know that regardless of the kind of communication used, entrepreneurs should pitch them the best and show how they are going to get the return on their investment. 

4. Have on-point market research

Show the investors that you have invested your time and effort in creating this business. Be ready with the work you have done so far, market research, a website or a model, tests, or any proof to prove the credibility of your project.

Be honest about the facts and valuations provided to the investors. Do not exaggerate the facts, gains, and execution, as realistic projections are vital for attracting investors successfully. 

5. Plan out a cognized business plan

Your business plan will need to be realistic, credible, and consistent to digest. Your business plan needs to know the basics of your company. Here are a few points to consider for a successful business plan:

  • The plan cannot be poorly written or too lengthy. Keep it concise and break it into parts, this helps the person reading it obtain the knowledge he/she wants.
  • The plan must be researched well. Know all the facts regarding your industry and business. Have some data handy to provide an idea for your future workings.
  • Do not include sloppy assumptions regarding your competition and products and services. The investors know well about the risks and competitions involved, you might as well include solutions to the potential problems arising in the future.
  • Make sure your assumptions are tied to tried and tested facts. 
  • Writing a business plan is not easy, do take on some professional help or advice to guide you through the process. 

Lastly, know your plan inside out. You should be able to answer any questions thrown at you regarding your business. 

6. First, ask for advice

Investors receive a lot of requests daily for investment opportunities, which gets annoying. Start by building a mentor relationship with them. Do not sound desperate while seeking advice, give investors the time to point out your flaws, and how to overcome them. 

Confront them with your struggles and problems, this will help you build trust. Eventually may result in your first investment. 

7. Choose the right investors

Before you approach the investors, make sure you reaching out to the right one. You will get the best results if you pitch in for an investor who is interested in your niche, has the capital to provide, and willing to invest in your company size. 

There are definitely some good ones out there, but you need a one who will trust you and would work efficiently to help grow together. 

8. Plan out the benefits for investors 

Attract Investors Today With These 10 Foolproof StrategiesAnother important aspect while pitching to investors is to illustrate what is in it for them. You have to be clear about the calculations of profit they would receive in the end.

Investors want to know when they will begin to see a return and how large a return would be. Be realistic with the number, do not overpromise or overvalue your business. The investors might break the deal if you don’t deliver as promised. 

9. Ask for what you need

An entrepreneur has to state and plan the outline the usage of the business funding in phases. Plan what you need, when and for what, and present it in a way to gain your investor’s faith.

Come up with an amount that your plans can justify as asking for too much will make the investor question you. 

10. Learn from failure

If your pitch doesn’t materialize, analyze the reasons for it. The responses received from the investors will help you understand what was accepted and went wrong. This will help you to strategize and come back stronger and better to another investor. 

Conclusion

However, the final decision to invest or not is vested in the investor’s hands and on the facts that have been presented. If you carefully follow the tips mentioned above, you will certainly find at least one investor who would want to invest in you. 

Be patient and positive, there are countless hurdles that’ll come along your way, it is your potential that will work through it and help you thrive in uncertain times ahead.

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