How To Find Potential Investors

8 years ago | Posted in: Business | 1072 Views

When a company is in a startup phase, they may need to get investors to take their business to the next level. One of the first things a company needs to do is determine the amount of funding they are seeking, and how the investment will be used. Armed with this information, and belief in a company’s mission, it’s time to contact investors.

 

Potential Investors

When looking to fund their startup, an entrepreneur needs to commit a certain amount of their own funds to the project. Many potential investors will want to know how much of their own money an entrepreneur has put into their startup project. It demonstrates the entrepreneur’s level of commitment. Some of the first potential investors an entrepreneur should approach are friends and family. In this situation, these investors will not be as discriminating as professional investors. The downside is the success or failure the business could impact the relationship for a long time. There are entrepreneurial resources that will promote certain venture capital firms. It is rare for a startup company to get funding from such a sophisticated investor. If they do, the startup will have survived an intense screening process. Crowdfunding is an option. The startup can get funding and be required only to provide a limited amount of financial information. There is a concern in the financial industry about crowdfunding and the possibility fraudulent transactions. It’s also possible to have success using the resources provided by the Small Business Administration to get funding. An angel investor will provide funding as well as mentorship, advice and provide access to their professional contacts. An incubator or accelerator organization will play a major role in an entrepreneur’s business model. They can provide funding and other resources to make a startup successful. Having sales negotiation training will help.

 

Develop Memorable Pitch

One thing that will impress a potential investor is a well-done pitch. An investor will want you to explain the potential for a return from the startup. They will want to know the details of how the project will mature and earn them a profit. It’s important an entrepreneur is able to explain easily how their startup opportunity is scalable to the size of its market. They need to explain how their product or service will impact the market. An investor will also want to know how the product or service will earn revenue. Being able to give a successful pitch under any set of circumstances is important.

 

Social Networking

This is a powerful tool in an entrepreneur’s arsenal for locating investors. Linkedin is a popular place to look for investors. It is a place where an entrepreneur can vet an investor. They can also be vetted by an investor. Once a potential investor has been identified, it’s best to try and be introduced to them through a mutual contact. It’s important to be patient and work to develop a positive relationship. Make certain the investor is an “accredited investor.” This means they have a household income that is over a million dollars in net worth.

 

Create Investor List

The chances of a startup getting funding from an investor are small, so casting a focused net for potential investors is essential. The goal is to determine who the fifty or fewer investors are that will work best with the startup. An entrepreneur must decide the type of investor they want for their project. The criteria could include investors with a history of funding similar projects, mutual connections, location, industry leaders and more.

 

Consistent

It could be difficult not to feel discouraged after getting a number of rejections. The ones who succeed are those who don’t quit. It’s important to realize that investors are always looking for a good startup opportunity. If an entrepreneur doesn’t hear back from an investor after giving them a pitch, it’s time to give them a follow-up if it’s been a week. An entrepreneur should continue to communicate with a potential investor. They should share any news about the startup project that may be of interest. Many investors are impressed by an entrepreneur with determination.

 

By: Dennis Hung

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