One of the biggest concerns first-time entrepreneurs have is attracting the funds for their start-up. Whether it is a simple coffee shop or an elaborate online business, the problem stays the same. However, there is no need to worry, because finding investors is actually not as complicated as many presume. Early stage investors are placing most of their faith in the CEO and founding team’s ability to grow the company and succeed, since generally there will be limited users and revenue at this stage to show for yourself. Here’s a comprehensive guide on how you can secure funding from the very beginning.
Characteristics Defining The Right Investor
In order to find the right investor for your online business, you must look for certain characteristics that will help you determine the best candidate. Some aspects to consider:
- Field: Your investor will preferably work in the same field as your company or at least in a vertical industry. This way, he will have more interest and expertise in helping your business grow and develop.
- Financial Agreement: Both you and your investor must understand that he or she is not the owner of your business. He is an investor and you, presumably, are the owner unless otherwise specified. This means that your investor will have to compromise with you in certain aspects of the work, especially in the financial department, and come to a common agreement that satisfies both sides. Make sure you still maintain voting rights and over a 50% stake in the company.
- Wisdom: Last but not least, your investor should have some wisdom regarding your business. If he is incapable of understanding more than the basics, he will not be the right decision for you. A good investor will be able to assist you at all stages of development and network you with the right people to grow your team and customer base.
Now that you know what to look for, here are six best ways to find an investor for your online business.
An obvious and easy choice, networking is the first solution everybody turns to. And it’s no wonder because a lot of businesses have found their investors and partners thanks to connections in the industry.
If you have friends working in the same field as your company or the business you want to start, ask them for recommendations. Maybe they know someone who would be interested in what you have to offer.
Alternatively, you can also use LinkedIn to connect with other professionals in the sphere and inform them about your start-up.
Graduates of these universities not only have the required skills and knowledge but also almost always possess enthusiasm for new start-ups. They love new ideas and are not afraid to put in their time, effort and even money into them. Try engaging with the campus entrepreneurial incubator as well.
If you don’t have that many connections in the industry, you can always resort to a different way of networking. Find the closest business school and call them. Such institutions often have many successful alumni that will be happy to work with you, as well as campus opportunities for pitch competitions, angel/venture capitalist meetings, and more.
There are numerous platforms that will help you find funds online. The first way is finding an equity crowdfunding platform that is right for you. Some popular examples include AngelList, CircleUp, and StartEngine.
If your company is actively participating in the industry or already has a good social media outreach, you can try crowdfunding in the form of donations. Some platforms for this are Kickstarter and Indiegogo.
Either way you choose to go, it is important to remember that a proper campaign is a must in crowdfunding. Even if this doesn’t click for you, you will still get exposure and maybe even get noticed by the right people.
To create a working crowdfunding campaign:
Do Your Research: See what other entrepreneurs like you are up to and how they set up their own campaigns.
Set Up The Campaign Page: Before launching, make sure that you set up everything you need on your campaign page. Hire professional writers, for example on Upwork, to write out your story. Edit your pictures in Photoshop or Canva if they need to be prepared in any way. The better they look, the more attractive your campaign will be. As a final step, consider translating your campaign into other languages to go international and find more people abroad. You can use a review website such as PickWriters to check their list of top translation services and find the right one for yourself.
Market Your Campaign On Social Media: Tell the world about what you are doing and make people interested. After all, they are the ones who will help you fund your project. In case you have various social media accounts, you can always use Linktree to have them all together.
Somewhat going back to networking, events can be a great way to meet old and new partners and potential investors. By going to events you will get exposure and have an opportunity to tell the attendees about your start-up, possibly attracting interest.
Of course, some events are local, while others can get to an international level. It is easy to get lost in the bigger ones, but on the other hand, there are more chances you will meet an investor who chooses you. Some events you may consider are Collision, WebSummit, and SXSW.
Consider attending local events too. In addition to that, you should also keep in mind that sporting events, film festivals, yacht shows, and others are also likely to be a place where your investors would go. Finally, it would be a great idea to host a workshop or info session about your company. Bring together influential people to test your product, give feedback, and help you succeed.
Perhaps one of the most powerful tools available, social media platforms are a way to develop a dedicated fan base, get exposure, receive feedback, find partners, and so much more. In the right hands, a social media account becomes a powerful marketing tool.
Before you jump into the bandwagon with everyone else, decide on which platforms are best for you. This will depend on what kind of business you are going to have and how can your brand be marketed on each of the platforms.
Some of the best and most common options include Facebook, Instagram, Twitter, and LinkedIn. While the first three are used for promotion to prospective customers, LinkedIn is used for connecting with potential partners.
You may also consider starting a blog for your company or business. WordPress is the most popular platform for this. You can also create a video resume on yourself and your business to promote using Belooga.
And finally, accelerator programs are an option to consider if you want to learn from the professionals and meet other entrepreneurs like you. This is a great way to prepare yourself to what starting a business will actually be like.
However, before applying for an accelerator program, you must do thorough research on what their success stories are telling you. Of course, there are some big programs such as Y Combinator and TechStars, but it is easy to come across smaller ones that are not as successful as they claim to be.
To sum up, finding an investor is not the hard part – getting funded is. If you try these strategies, you will have an opportunity to talk to and connect with dozens of investors, but from then on, it will be all up to your skills to persuade them to invest in you and your online business. But don’t give up and you will get the funds that you are looking for.