How to attract investors for your startup business
Attracting investors can easily be one of the most challenging things that you encounter when you launch your startup. However, you can’t grow your business without investors, which is why the sooner you start working on getting them on board, the better!
If you are starting a business, thinking about starting a business, or already well on your way and looking to raise your next round, here are a few things I encourage you to do to build excitement and successfully raise funding:
1. Make your business easy to understand. Do one thing, and do it extremely well.
Deciding on your “core competency” !
Without a clear core competency, it is very difficult for customers, investors, and even employees to get a firm grasp on what it is the business actually does. What’s the goal? What’s the one thing the business will be known for? What’s the problem, what’s the unmet need, and (in a single sentence) what’s the solution?.
If you can’t explain what problem your business solves, how, and why, in a sentence or two, then chances are you aren’t quite sure either. And if you aren’t 100 percent sure of what problem your business is solving in the world, investors aren’t going to know what they’re investing in.
2. Develop a strong business plan.
Your business plan is an essential document that proves one thing to investors: that your business is worth their risk. Your plan should clearly outline your business objectives and goals.
Show that you have a deep understanding of your target market and provide a complete description of the product or services you offer.
An essential section of the business plan is your marketing plan. It defines your market size and growth prospects and should show trend influences and sales potential.
3. Provide Management Team Bios & References
Investors have a keen interest in both you (as the founder) and the management team—from understanding their industry background to their business experience. They need to feel confident that you and your team can lead the company to grow and make a return on their investment.
Ensure you exude confidence and passion and demonstrate your willingness and ability to change course should your company need to shift direction.
Other positive traits investors look for in founders are the ability to make decisions with input from your leadership team (there’s no room for indecisiveness), excellent relationship and networking skills, and the ability to build a company around core competencies and deliver on them.
Final thoughts
Investors assume risk whenever they invest. An exit opportunity provides them a “reward” for their risky move. It’s therefore imperative to integrate an exit strategy into your business plan. Let investors know how you plan to return their investment. Will you pursue an acquisition? Merge with another company?
Choose an exit strategy that aligns with your business and personal goals. Your time frame may vary, so think about when you may want to implement your exit strategy as well. The objective is for all parties to exit profitably.
As exhilarating as it is, the fundraising process can be intimidating. But when you’re prepared, you can go in strong and confident—moving you one step closer to achieving your goal. Need help getting your financials in order? Do you have further questions about how to attract investors to your business? Contact us!