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HOW TO ATTRACT INVESTORS?

An investor is any person who commits capital with the expectation of financial returns. Investors utilize investments in order to grow their money or provide an income during retirement such as an annuity. An investor can be an individual, a shareholder of a company, a foreign investor, other companies, etc. Investors have varying risk tolerances, capital, preferences, etc. For instance, some investors prefer very low-risk investments that will lead to conservative gains, such as a certificate of deposits and certain bond products. However other investors are more inclined to take on additional risk in an attempt to make a larger profit. These investors might invest in currencies, emerging markets. The investor’s concern is to boost maximum return while limiting danger or losses. There can be different types of investors, for instance, hedge funds, mutual funds, angel investors, venture capital, etc. Investors can definitely help the startups to raise capital for their businesses. Moreover, they also provide valuable contacts, useful advice, and motivation for you to work harder at growing your business, in addition to providing the funding. Speculators, who desire to make a higher-than-normal benefit, have a more serious danger resilience than investors. Investors may work both in the primary (infusing capital into a business) and secondary market sectors (purchasing stocks from different investors). As such, they may either make a responsibility in return for a stake in a business, a fixed return (profits or premium) or sell their speculation later on at a greater expense.

Outline a business plan

A business plan is a written description of your business’s future, a document that tells what you plan to do and how you plan to do it. The first and foremost step to attract investors is to outline a business plan. The business plan should contain what your business is all about, goals to need to achieve who your potential customers are, and strategies to entice them among others. With a fully-defined business plan, potential investors can see where and how they’ll fit within your business, which makes it easier to establish future partnerships. A five-year plan is a good place to start, focusing on details for the first year, and becoming more general as you go along.

Avoid herd mentality

To pull in investors to your business, you will have sure that the product brings something new and fresh and which tackles the appropriate issues. Doing exactly the same thing with other people is definitely not the best approach if you intend to get investment from investors. A lot of entrepreneurs just take something that is already existing and tweak it a little, so attempt to remain in an alternate line.

Ask for advice

Instead of calling and sending emails to investors and begging them to invest in your business can be a state of distress so just try something else like seeking advice from them. By reaching out to an investor for advice, you may be able to build a relationship with them. This may result in being more willing to invest in what you are doing and also gives them a chance o point out flaws in your business and how to overcome it.

Social media

Social media can be the best friend for startups looking for attracting investors. It can be considered as one of the cost-effective methods. Some most popular social media includes LinkedIn, Facebook, Twitter, etc. LinkedIn can be used for sending 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.

Prepare a Market research

Facts, ideas, information, gain as much knowledge as you can about the are you are going to pitch, and find an investor. The motive is to show that what are your service standards, who are your key competitors, what is the size of the industry, etc. Further, you should also research your investors, that is to find information about their past investments, how genuine they are in terms of commitments, etc.

Know your business

It is essential to know your strength and weaknesses of your business. Be honest and provide a viable solution for your startup. You should be able to answer any question without any confusion and uncertainty.

Be realistic with your pitch

It is essential to get attention from investors before you start discussing your business proposal. The investor has to gain an objective idea of when their contribution can start bringing the return. So, it’s important to highlight how you are going to get them a return on their investment. Make a thorough business plan showing achievable goals and practical steps to reach them. Once you have their attention, you can move on to schedule a meeting and have a real discussion.

Spend enough time on financial details

Financial details will be set out in your business plan. At the same time, 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 are going to use for your business to give them assurance about the money they are investing is worth the investment. You need to prepare profit and loss account, balance sheet, and cash flow statement for the first 5 years.

Use smart sales tactics

After the pitch, it’s time to utilize your experience and knowledge towards selling this idea to the investors. Investors are ideally looking for opportunities that have the potential to shake up the marketplace. You have to show them what exactly makes your product or service different than all others, which means you need to highlight your USP (unique selling point).

Have co-founders

Starting a company alone is very difficult so it is important to have co-founders to rely on which can be huge upliftment for the company. Finding the right co-founder can make the starting process easier and even beyond attracting investors at the same time, having the wrong co-founders can ultimately harm your business.

Follow through

Fundraising is usually not a quick process. Engage a potential investor before you actually need the money. You should tell the investor where you are currently, where you will be before the closing of the next round, and what the new capital will enable you to achieve. Get them to agree that the metrics make sense and then notify them. Everyone admires someone who has a history of doing what they say they will do.

The way you present is very important

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, great in the event that they don’t understand your language, it is extremely unlikely you can break the arrangement. Using new ways to present your idea will take away a good impression on your investors.

Investors are in it to make money. Your task is to show them that you can do it better than other investment opportunities. Attracting investors is an incredibly difficult and time-consuming process. This is especially true for startups because they lack trade history. Today’s business world is constantly changing so if you are looking for ways to attract investors to your startup business, you need to be well-planned and prepared in advance. Using the above tactics will help you to win investors to your side and startup success will be in your hands.