Finding funding is typically one of the most challenging parts of starting a new business. The risks versus rewards of investing in new companies can usually make investors worried about jumping in. Entrepreneurs are responsible for making their business idea exciting and attractive enough to warrant investors' attention. Today's post provides six best practices to ensure your organization remains investor-ready. Let's explore.
1. Develop your company mission to attract the right investor.
As part of your business plan and general business growth, you need a company mission statement to build around. Investors want to know your “why” — you think the world needs your product or service. You should be able to communicate what problem your business solves in one or two sentences.
Tip
If you pitch to venture capitalists, include an exit strategy detailing how the investor can pull out its investment plus a profit. This could entail selling the business, publicizing it, or receiving a payout at a specific revenue and profit milestone.
2. Flesh out your brand voice to attract investors.
Telling your brand’s story is crucial for finding investors. Investors look for brand value, especially regarding social media and a business’s presence in its local community. If you marry a vital company mission with a distinct, well-developed brand voice, you’re halfway to finding the right investors.
3. Take as many meetings with potential investors as possible.
Finding the right investors means meeting with as many potential investors as possible. Accept any opportunity to talk. Numerous meetings will help you hone your business’s sales pitch, learn how to read potential investors and decide who would make the best partners.
Finding funding is often fraught with rejection and judgment as one tries to determine whether an investor is offering a good deal.
4. Don’t get discouraged when seeking investors.
When potential investors decide not to fund your venture, don’t give up. Rejection is part of the process. Do your best to focus on the next opportunity. When things get complicated, fall back on your business’s mission to remind you what you’re trying to accomplish. Remember that if only one investor agrees to fund your business out of the 50 you meet, that’s still a success.
5. Soft Sell Through Networking
When you first start out, it can be daunting to think about the funds you need and how you will get them. However, an easy way to start is to soft sell through networking. Networking is a surefire way to get your business out there and let other professionals know about your brand. Networking events are great opportunities to meet others in your industry, learn tips, and introduce your brand to the right people. The right soft-sell pitch can lead you to a deal with investors you otherwise wouldn't have had.
6. Be Prepared to Give up Equity
Seeking investment means trading something for access to funding.
You may have to give up equity. With venture capitalists and confident angel investors, you will give up equity in your company in exchange for funding — which may mean investors have decision-making power on significant company issues.
You may pay for the money you receive. With banks, you’re borrowing money, paying a premium or interest rate on the amount the bank lends you. This also has strings attached, as many banks want to know how you plan to use your loan before they issue it. You may trade inside access or even equity for funding with online crowdfunding platforms.
In the twenty-first century, investors remain one of the best methods of leveling up. However, much like anything, there is a valuable cost. Hence, leaders must weigh their options and consider what they must give up to obtain funding.
Warm Regards,
CeeCee