All startups thrive on funding and financial injections to support talent and technology acquisition and cultivating competitiveness. Startups require financing at every stage of their life cycle to achieve their organizational vision with adequate funding. Unfortunately, many entrepreneurial dreams have failed to survive due to a lack of funding.
Attracting and securing investors isn’t easy. You may have a stellar business idea with enormous profitability potential, but your lack of funding prevents you from actualization. Attracting investors requires a knack for communication and presentation. Figures and planning amount to little significance if entrepreneurs struggle to present their plans with an animated presentation.
Many startups succeed at securing seed capital and run into financial challenges while increasing their sales volumes and clientele. Female-run startups face enormous obstacles, as investors routinely undermine female entrepreneurs and their abilities to run a profitable enterprise. Every startup has its unique challenges, but the formula for attracting investors remains the same.
Keep reading to explore pragmatic strategies to attract investors and jumpstart your entrepreneurial journey.
1) Create a Comprehensive Business Plan
Investors seek to invest in profitable enterprises that offer high returns on their investment. Can your business model ensure profitability and lure investors with the advantage of securing profits?
Investors require a comprehensive business plan to run their calculations and forecasts and ensure the viability of a model. High-profile investors have a team of accountants and financial experts to run these calculations and projections for them. Investors rarely make decisions without the approval of their financial advisers. You can increase your chances of securing investments by doing the math for them and creating an effective business plan.
For instance, investors often hesitate to invest in female-led startups, doubting women leaders and their capabilities. Savvy and comprehensive planning proves effective in eliminating barriers to female leadership and wooing high-profile investors. Presenting investors with financial projections and extensive calculations of profitability instills trust and credibility. It’s natural for investors to undermine female entrepreneurial acumen, but they cannot undermine facts and figures.
So, infuse your business plan with comprehensive details covering every aspect of expenditures, profitability, and growth potential. Rope in investors with the advantages of profitability, and explain the risk-gearing ability of your business model. Your business plan must exhaust every question and query an investor may pose to probe and identify weaknesses in your enterprise.
2) Start with Market Research
It’s crucial to approach this endeavor with diligent and extensive research. Are you targeting venture capitalists or angel investors to infuse your startup with a substantial chunk of funding? Research is of the essence to learn more about your potential investors.
You must devote ample time and resources to learn about the investors you’re planning on approaching. You must gain comprehensive knowledge about their investment portfolio, corporate interests, investment potential, and startup inclinations. Have they ever invested in a similar startup model as your business? It’s wise to target investors who are interested in your specific business model and industry.
For instance, investors keen to invest in clean and sustainable technology are more likely to invest in a green energy startup. Likewise, investors hooked on the fashion industry are likely to invest in an organic clothing brand. Your research will help you identify investors who are keen to invest in your industry, sector, and niche.
Learning about an investor’s background will help you add a personal touch to your pitch. You can pull cues and insight from their early college experiences and their beginnings in the corporate world. These dedicated efforts will help you gain attention and build rapport to start with a great impression.
3) Make a Realistic, Well-Grounded Pitch
Unrealistic, haphazard, and overly idealistic pitches are a foolproof strategy to scare off investors. You will never score investments if you fail to capture interest with a clear, well-grounded pitch.
Your pitch must explain the following:
- How much investment does your startup require?
- How long would your business continue requiring funding?
- How will your startup progress over a year?
- What kind of returns can your business offer an investor?
Your goal is to convince investors that your startup will address existing problems with a robust, marketable, and profitable response. You must present a convincing and compelling picture of your business idea, supported by comprehensive and animated visuals. Undeniably, presentation matters, and usually much more than facts and figures.
If investors struggle to stay awake during your presentation, they are less likely to take your idea seriously. You need to capture their interests and jolt them awake with a business idea that engages, inspires, and encourages them to invest.
4) Be Prepared to Negotiate
Securing a high-profile investor may compel you to share your autonomy and business ownership in exchange for funding. It’s crucial to be prepared to negotiate the possibility of welcoming an investor who wants an active role in your business.
For instance, an angel investor might want to come on board as a financial adviser, mentor, shareholder, or board member. Investors are often keen to serve as representatives or carve out more prominent roles that give them control over day-to-day operations.
While the idea of sharing control and autonomy may seem threatening, consider the advantages for your startup. For instance, a high-profile and seasoned investor will benefit your business with a thriving network of business associates. Your investor can help you build a network of lucrative connections, vendors, supply chain partners, and other investors.
Venture capitalists commonly ask for a seat on the board of directors to enjoy significant returns on their investments. It’s crucial to keep an open mind to power-sharing offers and negotiate a settlement with a pragmatic strategy. We advise approaching the negotiation table with a seasoned attorney who can help you secure your interests.
5) Express your Passion
You may want to approach presentations and pitches with an all-business and serious, non-animated attitude. That’s a mistake.
Investors have a team of financial planners, advisers, and consultants at their disposal. They don’t merely need you to present them projections and forecasts they can obtain from their team. Instead, they want to see your passion, dedication, and determination to turn an idea into a flourishing and profitable business.
So, don’t restrain your passion; instead, let it shine. Show investors that you firmly believe in your idea and do whatever it takes to actualize your vision. Inspire them with your commitment to making things work, and infect them with your entrepreneurial energy.
Securing investors for an early stage investment isn’t straightforward, and we urge you to stay focused, steadfast, and optimistic. A positive attitude will help you overcome failures and start each day with renewed determination. Actualizing your vision will take time, and you mustn’t let the fear of failure dissuade you from your entrepreneurial agendas.