Everybody talks about how difficult it is to put a business idea into practice and get a startup off the ground, but no one talks about how hard it is to keep it running and make it thrive in a business environment that keeps getting more competitive by the day. The simple truth is that starting a business is not necessarily the biggest challenge you’re going to face as an entrepreneur. That’s just the beginning of your journey, and there are many other obstacles you’ll have to face as your business evolves.
Without a doubt, one of the biggest concerns for entrepreneurs is attracting investors to their business. And it’s not just startups that require outside investments but also established companies that are looking to grow and expand their operations. But how does one find people who would be willing to provide financial support? And, most importantly, how do you convince them that your business is worth investing in?
If you’ve been having trouble finding investors for your company it might be because you haven’t used the right strategies. So, maybe it’s time to try something different and give these methods a try.
Prove your potential through results
You’d be pretty naïve to think that an investor would even consider giving you the funds you require without having clear proof that investing in your company is a good idea. It’s true that investing implies taking a leap of faith, but that doesn’t mean investors are willing to go in blindly into something.
It’s just as true that you need to have a profitable business to prove your worth, but you also need investors to make your business profitable, so it can be somewhat of a vicious cycle. However, it’s best to wait for your business to bring real results before you approach an investor. You’ll be able to deliver a much more convincing pitch if you have actual evidence that your business idea works. Arm yourself with hard data instead of nice stories and your chances of securing the investment you need will increase considerably.
Choose the right partners
Investors won’t only analyse the products or services your business provides, but all the other attributes that make your company a viable investment venue. That means your team also plays a crucial role in making your business more appealing to investors. From an investor’s point of view, companies that are run by multiple co-founders present higher credibility. The number of co-founders is also important – three co-founders are usually better than two because it helps facilitate the decision-making process.
However, adding co-founders to a business just because it looks good on paper is not a sound approach. You should choose both co-founders and business partners wisely if you want them to be seen as valuable assets. It’s better to go at it alone than to surround yourself with people who don’t share your vision or values.
If having multiple co-founders and partners raises concerns about the future of your business, steward ownership provides a great alternative that ensures your business will remain true to its mission, thus helping you maintain control of your business while also attracting outside investment. This also stresses the importance of using an effective cap table management tool to keep track of all the company’s securities and help investors understand your firm’s capital structure.
Build your network
Most business owners and investors would agree that cold calls and other hard sell tactics are not the smoothest nor the most comfortable ways of convincing someone to invest in a company. It can feel awkward for both parties involved to start such an important conversation out of the blue, given the direct and sometimes aggressive nature of this approach. In many cases, hard sells have the opposite effect of what you’d hope for, prompting a negative response from potential investors.
It’s preferable to take a longer less direct route and build a connection with potential investors prior to making a move, and that can be done through networking. Expanding your network gives you the opportunity to meet people in your industry who could provide the funds you need and present your proposition in a more natural manner. If you play your cards right and spread the word about your business, you might not even have to go after investors as they’ll come to you.
Let’s say you have the chance to sit down with a potential investor to talk about your business and why they should invest in it. In this situation, the worst thing you could do is improvise. It’s not just the outcome of the meeting that’s at stake here, but also your business’ reputation. If you come off as unprepared and unprofessional, you won’t be able to convince any investor to take a chance on you.
Investors are looking for businesses that have potential and entrepreneurs that know what they’re talking about. That’s why you have to know your business inside out and prepare yourself thoroughly before you pitch your idea. You have to be confident when talking about numbers, equity management, performance, goals, and other relevant data about your company, so think about what investors would want to know about your company and get ready to answer all their questions.
Investors have limited time on their hands, so if you get the chance to talk to them you should use your time wisely. It’s important to tell them all about your strengths and present your business in a favourable light, but make sure you don’t overload them with too much unnecessary information. The message you’re trying to convey may get lost in excessive irrelevant details, so try to get straight to the point.
Keep your presentation short, and make sure you explain your idea clearly. If they ask you to expand on certain points, you can go ahead and provide more details, but don’t lose track of your thoughts or digress from what they’ve asked you.
Finding investors is definitely not an easy endeavour, but if you can get other people to see your business the way you see it and convey your passion for what you do, attracting investors to your company won’t feel like such an insurmountable challenge.