Many people have creative business ideas, but the lack of funds to turn them into thriving businesses holds them back. Others have great products, but they are yet to be profitable because they can only serve a small audience. They have no funds to hire a large workforce, market their products or expand.
Nearly all hyper-successful startups have engaged in some form of fundraising. CB Insights analyzed 45 startups that great venture capitalists bet on and are now profitable. Facebook, WhatsApp, Alibaba, Zynga, Spotify, and Airbnb are some high-impact companies that received funding.
Venture capital firms and agile investors are willing to pour their money into startups that they believe will someday be profitable. As a result, many thriving blockchains, rental property investments, insurance, education, and finance startups are funded through crowdfunding, bootstrapping, venture capital, venture debt, etc.
But, none of the entrepreneurs or founders received a random call from the bank or venture capital firm. They had to pitch and attract investors.
Here are the best ways to get noticed and drive investors to your startup:
Discover the Types of Investors
First-time entrepreneurs fail to get adequately funded because they don’t know the type of investor their business needs. Thus, they set off to search for investors without vital information and waste their time pitching the wrong people.
There is no universally acceptable type of funding for all startups. As a result, your business may use one or more types of financing in its lifetime.
The following are different types of investors for each growth stage:
All businesses started as an idea. People turn to the internet to look for solutions to the problems they’re experiencing. On the other hand, entrepreneurs are keen to offer them solutions, thus the reason why today there are many startups.
Techvestor offers a strategic way to invest in short-term rental investment properties. Other companies focus on education, finance, and the real estate industry. What kind of solution can you offer people seeking answers to these popular questions?
- How to buy the first rental property?
- Tips on investing in vacation rental property?
- Where to buy a rental property?
- How to buy your first rental property?
- Investing in a rental property for beginners?
- How to buy a rental property?
- Short-term rental investments?
The next step is to fine-tune the idea and obtain funds to develop it further. You can start a business to offer tips on rental property investment and find investors to fund your business idea.
The following are ways of funding your business at the idea stage:
You can finance your idea through personal savings and disposing of some personal belongings to raise funds. Although the method gives you complete control and allows you to run a lean organization, it limits the growth of your business.
Funding your business through personal savings is risky, and a shortage of funds makes it difficult to scale. The good news is that you can easily tap into a larger community of potential customers of your products.
Crowdfunding platforms allow you to access a much broader customer base and funding. Although you don’t cede any equity, your business and reputation are at risk if you fail to deliver the promised reward.
Family and friends
True believers in your project may give you substantial financial assistance to help transform your idea into a business. These investors may be less involved in the daily operations of your business but are anxious about getting their money back when the company grows.
Entrepreneurs need more money to perform specific tasks such as market validation and sustain growth. Here are additional ways to support your business.
Incubators / Accelerators
Your business might receive an invitation to join a startup incubator or accelerator program. You can expect to receive a state-of-the-art work environment, strong industry connections, business mentorships, and seed funding.
But the competition is intense in such programs, and there is no guarantee that you will receive any funding. However, you get access to mentorship and resources to help you design a website or mobile app to offer tips on how to buy a rental property or attract top talent in the industry.
Seed, Early, and Growth Stages
This stage marks the end of initial preparations, and the business starts attracting customers. You need adequate funding to allow the company to cut out a market share and ensure repeated success.
Venture Capitalists (VCs)
These are part of private sector investors with a pool of money that they invest in biomedical and technology companies, among others. Venture capital funds originate from pension funds, foundations, corporations, and other organizations.
VCs play an active role in startups in that they fund and receive equity in exchange for funding. Your business needs expertise, resources, connections, etc., in its development stage.
Venture-backed startups can access this type of funding. This is a loan that a business has to repay even when it’s not profitable. One of the disadvantages is that you have to give up some equity in exchange for the money.
Businesses in the early stage can receive upfront capital as long as they can demonstrate the potential to drive consistent revenue. But they must give the investor a specific percentage of their future earnings.
Private equity firms raise funds through third-party investors like insurance companies, universities, pension plans, or charities. They then use it to fund businesses. Private equity firms can buy out your company and get 100% ownership of its profits.
Know Where to Find Investors
Now that you know different investors for each company stage, the next step is to find out where you can find them.
Attend Industry Events and Network
As mentioned above, venture capitalists or agile investors rarely call startup founders seeking opportunities to invest in their businesses. It’s the business owners who meet investors where they frequent.
You should attend trade shows, conventions, seminars, or any other event your industry hosts and try to network with people. You might get a potential investor for your business.
TechCrunch Disrupt and MeetFounders host events that bring investors, developers, founders, and experts together annually. If you get the chance to join a startup incubator and accelerator program, use its resources and mentorship forum to pitch investors.
Participate in Community Forums
Getting involved in your community activities can expose you to potential investors. Such organizations offer free business resources and educational content. Some of these community forums that you can join are:
- SBA community
- National Federation of Independent Business
- Local Chambers of Commerce
Explore Brand Building and Crowding Opportunities
Startups must develop an effective marketing strategy to help them reach far and wide. Your marketers can run a marketing campaign to create awareness about your company and raise funds on crowdfunding platforms. They can also use social media platforms, newsletters, or blogs as gateways to further investments.
After all, many people on social networks search for information your business can provide them. You can turn to Facebook, Twitter, LinkedIn, Instagram, or YouTube to share tips on how to invest in real estate, make money with rental properties, buy a vacation rental property, grow rental property passive income, etc.
Your huge following and high-quality content may get the attention of your industry experts and potential investors, which makes it easy to pitch to them.
Use Online Resources
Some online platforms like Crunchbase Pro maintain an extensive database. Any entrepreneur can easily filter information about investors in their industry.
For instance, you can research VCs and private fund firms investing in the property market, follow them and attend events where you can find them. Such efforts can help you find potential investors for your business.
It takes time and effort to build a successful business. Fundraising is not easy, but the funds can unlock many opportunities. Therefore don’t discard your idea to create a startup company to guide people on how to make passive income from rental property investment.
You may consider the option of funding your business from personal savings, asking for money from family or friends until you’re able to attract the attention of venture capitalists, or accessing revenue-based financing.