Looking for Investors for Your Business
Maybe one of your dreams is to be noticed by a Silicon Valley bigwig or maybe all you hope for is that someone with extra money would be willing to take a risk in your idea. If that’s the case, then you need to know how to look for potential investors.
Peddling your idea or technology to anyone is risky. Why? Because they can copy it anytime! You need to find a serious investor who looks at startups from a long-term business perspective and not just someone looking to steal ideas and pass it on to a more experienced company. Now, looking for investors is a two-pronged venture.
It’s about what you can offer and what they can give you. First, you need to prove that you are worthy of their time and resources. Second, you need to make sure that your potential investor shares your vision and can be trusted with your idea or product regardless of the outcome. Here are some practical tips on how to look for a business financier.
Create a profile of your ideal investor
Ask yourself what you truly need—a person who will give you the funds and lets you do your own thing? Or an investor who will be involved in your business operations? If you’re new to the startup industry then you might need an investor who can also act as a mentor.
In terms of expertise, would you prefer someone from your industry or someone outside of it? In terms of network, would you rather have an investor who has a lot of connections or someone who may not be that friendly but is very strategic in his or her business dealings?
Also, determine the amount of money you need. Do you need $50,000 or $1 million? You will be able to narrow down your choices quickly depending on how big or small your funding requirement is.
The more specific you are in your profiling, the easier it will be for you to look for your ideal investor. This will also help you have realistic expectations on your potential financier.
Scout your investor
Now that you have your ideal investor in mind, it’s time to look for him! Start by asking within your circles starting with your own family, friends, colleagues, or even crowd sourcing on social media. Exhaust all your contacts and secondary contacts first because this is the easiest. Plus, people can easily vouch for you.
If your investor remains elusive, try attending expos and industry-related events where you can possibly meet like-minded people who may end up knowing an angel investor. You can also go to one of the companies near you and ask how they find investment.
During this time, ask people for as many referrals as you can whether it’s from your old or new contacts. You will not find investors in Craigslist but you can find them within your network and all the six degrees of separation between.
Try attending expos and industry-related events where you can possibly meet like-minded people
Think of the value you can offer
The main thing that you offer is your product or idea. You must show your investor the value of your proposition and how this will benefit not only your customers but also your financier. Remember that this has to be a win-win negotiation for you both.
You may be overly enthusiastic presenting your idea that you fail to answer this perennial question lingering in the mind of your investor, “What’s in it for me?” Make sure that you strike a balance between presenting the value of your product and the benefit it will have to your investor.
Your second equally-valuable asset is yourself. Some investors give more weight to the character of the person they are dealing with than the actual product he is promoting. You need to showcase your strengths, be respectful, and be honest. Show professionalism, arrive early, keep your presentation concise but impactful.
More importantly, keep your composure regardless of the outcome. Show a positive attitude and always leave the door open. Why? Because that investor may not share your vision but he may know of someone who does. Your response to rejection can be the game changer in your proposition.
Showcase your strengths, be respectful, and be honest
Keep communication lines open
Not all first meetings end with a “Yes, I’m in.” Usually, investors will need time to think about your business proposal. They need to look at the pros and cons of investing in your product. Even if they say they’ll think it over, don’t be discouraged or complacent.
Send a “thank you” email after your meeting and follow up on the date you both agreed on. If the investor didn’t give a time-frame, you can keep in touch again a week after you sent your “thank you” email. Then after that, you can follow up a couple of months later.
Another way of subtly reaching out is by sending some additional information or documents that you think might help influence your investor’s decision. It can be early reviews from users, more information about the technology you’re developing, research articles, and the like.
Bottom line, don’t be pushy. Keep a balanced distance. If your investor rejected you, maintain a positive relationship with him. If you’ve made developments in your product, update your potential investor about it every now and then. Develop a personal connection regardless of the outcome. You’ll never know when a person changes his mind!
Finding an investor can be challenging but once you find him, all the work you’ve put into from scouting to preparing your business plan, follow-ups, and building genuine relations will all pay off. So, do you have a product or idea brewing for a long time but don’t have the funds to make it a reality? Start looking for an investor now! He may be just around the corner.