Most of the leading companies around the world began as humble start-ups. A few years ago, it was very difficult to start a business from scratch because of the lack of monetary support from investors. But that has drastically changed today.
Investors are identifying the potential of the right start-ups to support innovation. According to Statista, investment in start-ups has become popular in recent years, with start-up funding across all industries increasing by around 50% between 2012 and 2017.
New start-ups are arising and boasting millions of dollars in Venture Capital (VC). You might have an innovative idea for a product or be confident about being competitive in the market. But regardless of everything, you need funds to manifest it into reality.
Below are the most efficient ways to find investors for your start-up.
Use your Network
A lot of people are looking for investors and delivering so many pitches. Investors are more likely to favor start-ups that are introduced to them by a known person.
That person can be a friend from school or college, someone you have worked with, or a relative. The broader the network, the greater the chances of having someone in contact with an investor.
If you find even one person who is in contact with investors or works at an investment firm, it will be easier for you to at least begin. Meet that person and share your start-up idea with them, along with its advantages. That person should feel that the deal will benefit both you and the investor. Then, ask him or her to introduce you to the investor.
You can also first decide which investors you want to reach out to and then research whether you know someone working at that investment firm or if that person knows any of the board members personally or professionally.
Talk to People in your Industry
Another idea is to find new companies that are in the same industry as your start-up. Attend meetings and conferences around you to get involved with the founders of those companies. Connect with start-up groups and founders on social media.
Be humble and talk to them, and learn how to find the right investors. Many investors are specific about industries like retail, software development, travel, etc. This will help you narrow your search for investors. And who knows? The person you are talking to might recommend your name to an angel investor.
Leverage Start-up Launch Platforms and Angel Networks
Nowadays, there are platforms dedicated to helping start-ups find the right investors. These platforms offer information and assistance according to the industry and its requirements.
You can also find investors through angel networks. The Angel networks are made up of Angel investors who serve in specific areas. Along with the investment, the Angel investors provide mentorship, advice, and access to their network.
To easily connect with Angel investors, it would be better to create an AngelList profile. This profile should include information about your company, products, and employees. This will help you land meetings with investors. If they like the idea, you might end up getting offers from multiple investors too.
Create a List of the Right Investors
There are thousands of investors out there. If you randomly approach each one one by one, you’ll end up wasting your valuable time. Do thorough research and create a list of investors that align with your ideas, industry, and business goals.
From those thousands of investors, you have to include only 30 to 50 on the list. If the list doesn’t suffice, you can always add it later. Prioritize the investors on your list who can be most beneficial to you.
Once you have created the list, connect with mentors to learn what investors want from a start-up or how you should land a meeting with them. The mentors can be your friends with established companies, financial or investment experts, or influencers. Their experience and guidance can help you with navigation.
Craft a Quick and Effective pitch
While reaching out to investors, keep in mind that some investors don’t even get enough time to check their emails properly. Chances are that they receive a lot of requests for investment every day. If this is the case, you have to keep your email short, to the point, and genuine. Your email shouldn’t sound like you are sending the same thing to every investor.
If you have successfully landed a meeting with an investor, it doesn’t mean they will invest in your idea for sure. In the meeting, you get a little time to present your idea and grab their attention. Be prepared with a quick and effective pitch that is succinct and powerful. Your aim should be to make it easy for them to understand while being thoughtful and selective.
Just as you want the right investor, the investors also want to invest in the right start-ups. When they listen to your idea, they should feel that the investment will bring value to them.
Be prepared for Rejection
Be prepared to hear “no” a lot when finding an investor because you are asking people to raise money for you, which is a risky business. If you approach all 50 investors on the list, chances are you’ll get a “no” from 40 of them. And from the remaining 10, 5 might say “maybe,” while the other 5 can give you a “yes.” Or maybe all of them reject your proposal.
You will get rejections from many of them, but you end up learning a lot from them, like what they want in a company to consider the investment, what’s missing in the idea, what needs to be reconsidered, and more. In initial meetings, you might not have answers to certain questions, but you can learn from them and be prepared for the next.