HOW TO ATTRACT INVESTORS

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An investor is any person who commits capital with the expectation of financial returns. He can be an individual, a company shareholder, a foreign investor, other companies, having varying risk tolerances, capital, preferences. Startups cost more money to get things up and running well. That’s the time they seek the help of investors to finance their operations. Investors help to raise capital for the startups.

Moreover, they also provide valuable contacts, helpful advice, and motivation for you to work harder at growing their business. Entrepreneur’s task is to show them that they can do it more significantly than other investment opportunities. Using different tactics can help to win investors on their side. Here are some tips to attract investors to your business.

1. Develop a strong business plan:

The first and foremost step to attract investors is to outline a business plan. A business plan is a written description of your business’s future, a document that tells what your business is all about, goals to need to achieve, who your potential customers are, what you plan to do and how you plan to do it. Elements of a business plan include an Executive summary, Company overview, Management team, Market and Competitive Analysis, Sales and marketing plan, Financial analysis. With a fully defined business plan, potential investors can see where and how they’ll fit your business, making it easier to establish future partnerships. In short, it must be easy to digest and demonstrate a clear strategy that makes your business idea profitable.

2. Avoid herd mentality:

To pull in investors to your business, you will ensure that the product brings something new and fresh and tackles the relevant issues. Doing the same thing with other people is not the prime approach if you intend to invest in investors. Many entrepreneurs just take something already existing and tweak it a little to remain in an alternate line. It is essential to think about ideas out of the box.

3. Ask for advice:

Instead of calling and sending emails to investors and begging them to invest in your business,  just try something else like seeking advice from them. By reaching out to an investor for advice, you may be able to build a good relationship with them. It may result in being more willing to invest in what you are doing and give them a chance to point out flaws in your business and ways to overcome them.

4. Social media:

Social media can be the best friend for startups looking to attract investors. Investors tend to have well-rounded profiles on their social media channels such as LinkedIn, Facebook, Twitter. Get connected with them and let them know you are a keen follower. Find out their responses, followers and also ensure whether they have invested in a similar industry in the past. Social media like LinkedIn can send cold messages and seek quality introduction, Facebook for maintaining relationships with investors, and Twitter for thoughtful conversations and engagement with relevant information shared by the investor. Take enough time to know them better, both personally and professionally.

5. Conduct Market research:

Find the right investor who understands your business segments by conducting market research. Start researching them in detail. Collect facts, ideas, and information and gain as much knowledge as possible about pitching and finding an investor. The motive is to show that your idea solves a real problem and market for the product/service. Further, you should also research your investors to find information about their past investments and genuine commitments.

6. Obtain customer references:

Apart from meetings and discussions, investors like to refer to customer satisfaction regarding your products/services. Investors look to understand whether they are happy customers, what value the company brings to its customers, your procurement process, and what differentiates them from other competitors. So, arrange for customers to offer interviews to potential investors what the time comes.

7. Be realistic with your pitch:

It is essential to get attention from investors before you start discussing your business proposal. Pitch after pitch may fail, but don’t be over-aggressive or defensive. Be patient and be professional. The investor has to gain an accurate idea of when their contribution can begin bringing the return and how you will get them a return on their investment. Most importantly, rehearse your pitch and anticipate investor’s questions and have answers ready. Explain what is unique about your product/services, who your targeted audience is, how you intend to acquire customers, and show them your exit strategy.

8. Explain your financial statements:

Financial statements tell a lot about how you operate the business. Simultaneously, they should be set out professionally in a spreadsheet such as excel. Show them the revenue model, expected cost, and profit prediction based on market research that you will use for your business to assure them that the money they are investing is worth the investment. Prepare a profit and loss account, balance sheet, and cash flow statement for the first five years. Prove that your business model and financial information are realistic and will become profitable to your startup.

9. Use brilliant sales tactics:

After the pitch, it’s time to utilize your experience and knowledge towards selling this idea to the investors.  Consider storytelling, exciting sales pitches, soft-selling through networking as some ways to attract investors through sales tactics. Startups must convince investors that people are willing to buy your product or services and should have the potential to shake up the marketplace. You have to show them what makes your product or service different from others, which means you need to highlight your USP (Unique Selling Point).

10. Have co-founders:

Starting a company alone is overly complicated, so it is essential to have co-founders rely on it, which can be a vast upliftment. Find the right co-founder who introduces you to valuable knowledge, advice, and connections and makes the startup process easier beyond just attracting investors. Nevertheless, having the wrong co-founders can ultimately lead to the failure of your business. So, choose them wisely.

11. Solid Management Team:

Show that you have an innovative and strategic management team to lead the business. Investors are searching for a solid team with in-depth talent, skills, experience, and excellent business ideas. When the team members have had achievements in the past, it indicates they can succeed in the future. So, build a team that is efficient and passionate to work hard and contributes to startup success.

12. The way you present is extra essential:

Investors might be meeting hundreds of people in a month, so you need to be different in those terms to make the difference for them to think about investing in your business. Be exceptionally clear, compact, and audible about the words you are expressing in the event otherwise, and it is doubtful you can break the arrangement. Using the latest ways to present your idea will take away an admirable impression on your investors.

Attracting investors is an incredible struggle and a time-consuming process. It is especially true for startups because they lack trade history. Today’s business world is rapidly developing, so if you are looking for ways to attract investors, you need to be well-planned and prepared before. Need help getting investors for your startups?. Trust us to find the right investor for you!