Attracting Investors to Get Funding for your Business
Whether you’re a start-up just getting things going, or an established business looking to expand, attracting investors is important. However, you’ve probably realized that no matter how good your business is, there isn’t a very good chance of an investor just showing up and offering you a big cheque without some work on your end.
Here are a few tips for how you can attract investors to your business.
Have a Strong Business Model
Having a detailed business model is important. Investors won’t just want to see how your organization operates, but they’ll also want to understand if your model is scalable or repeatable. Investors don’t want static businesses, they want to see growth. You’ll have to show them that you have a solid plan that isn’t just profitable, but one that shows a clear path to growth and increased profits.
Most investors rely on guidance from their social and business circles to advise them about potential investments. Rather than cold calling investors, spend some time attending local business networking events. Meeting other people in your local start-up, business, and investing community can help you build the connections you need to attract investments.
If you’re a first-time entrepreneur, you may want to look into joining a local start-up accelerator to help you build some connections. If you’re a more established organization, there are likely several local business organizations that you can join. It’s also a good idea to reach out to former clients, customers, and businesses you’ve worked with and strengthen your relationships with them. You never know when someone in your network will introduce you to a potential investor.
Personalize your Pitches
Don’t send out the same email or letter to all prospective investors. Don’t give an identical presentation to each possible investor either. Investors are typically very busy and they do not have time to deal with bulk pitches. You’ll also have a much better chance at impressing an investor if it’s obvious that you prepared your pitch just for them.
Do Your Research
Whether you’re looking at angel investors, venture capitalists, or any other types of investment, know that each investor is unique. They have their own preferences about where they like to invest, as well as their own interests, their own personalities, their own quirks and more. You’ll have a much better chance at attracting investment if you approach those investors who are best-suited to your business. Plus, doing some research will help you tailor your presentation to each specific investor.
When you’re looking for funding, you’ll need to be practical. Having realistic expectations will help you prepare your presentation and give you a better idea of who you should be pitching to.
You also do not want to go into a meeting with an overly inflated valuation of your business, as most investors will see through this pretty quickly.
Finally, you’ll want to make sure that you have specific and realistic uses for the money, if you are able to get the funding. You’ll need to have good answers to questions like “What do you hope to accomplish in the next year?”, “How much will it cost to achieve your goals?”, “How will you judge your success?” and more. If you can’t give realistic and specific answers to these questions, most investors won’t be interested.
Investors want to see that your business has profit potential, and one of the best ways to demonstrate this is by backing up your claims with actual results. While sales numbers are obviously important, they’re not the only results that can impress investors. If you have many repeat customers or strong relationships with your customer base, bring evidence to show this. This can get investors excited as they’ll see that your brand has a loyal following.
Attracting investors is important. It’s also difficult. Since it’s so critical and challenging, it’s a good idea to get some help. For instance, working with a Chartered Professional Accountant and a Chartered Financial Analyst will ensure that you have an accurate valuation of your business. A CPA and CFA can also help you generate earnings reports, prepare presentations and investor packages, and even represent you in investor meetings. Contact us today to find out how we can help your business attract investors.