It’s the golden rule of any business. Network, network, network.
It goes without saying that if you get yourself in front of the right people, then opportunities will appear.
If you’re not visible, how are investors going to know about you as a person and whether you’re investible, and also about your company and what it is they do.
Though it may be a tiring process to begin with, ensure that you get to as many industry events as possible.
Don’t worry if your business doesn’t even exist, or if you feel underqualified, because the knowledge you will gain from these events will be invaluable, particularly if you can foster relationships that will be of benefit further down the road.
Prepare Your Pitch
If there’s no marketing or business plan available as part of your pitch, don’t expect people to invest in your company. Why would they?!
You might have an amazing idea, but investors need to be assured that you have the end goal in mind and what you need to do in order to get there – including establishing performance milestones.
You should have the vision in mind as to how you’d like to see your startup grow and how you’d like your product to be marketed.
But who are your key customers? What do your expenses look like? What do you expect your ROI to be?
Long-term planning and specifity is key, as is the amount you required in investment.
Make sure that the field you’re ready to enter doesn’t have any surprises. In order to do just that, gen up on whatever information is available, as you’ll need to be highly knowledgeable and be able to answer any questions potential investors will pose.
Who are your competitors, what’s the state of the industry at present and what is the history of the industry/
If you can’t answer these and more, you can forget about any meaningful investment. You need to be able to thoughtfully and thoroughly answer them.
Keep things tight, no longer than 20 minute for your pitch, and don’t read your pitch word for word. Use it as a guide to a visual storyboard only.
Know What Investors You Want for Your Startup
What is it you want, precisely, for your startup?
Funding? A guide as to how to create a successful business?
It’s important that the investors you choose match your criteria, as they are the most likely to bring your vision to life.
Private Equity firms, Venture Capitalists, Angel Investors, crowdfunding and/or using friends and family can all be helpful to you in the short-term if approached correctly. Even microloans or crowdfunding might be suitable.
Whichever route you do go down, make sure at the outset that it is the right one for you, given that about 90 percent of startups fail within the first year.
Get that marketing and business plan down, and get the knowledge on how to raise capital. Doing things properly will ensure your company is one of the 10 percent that do survive.
Different Types of Investors By Company Stage
When funding is required, it’s important not to waste any time. Therefore, certain funding options may make more sense than others, and it will all depend on what stage of development your company is at.
A mix and match approach to investment opportunities should see that you have diverse and multiple capital streams.
Close connections or your own personal funds may well have to be used at this stage.
This is because, in general terms, the entrepreneur will still be fine-tuning and developing the concept of the startup.
It’s by this point a detailed business plan really needs to be created.
This is where you become the investor.
The difficulties involved with gaining investment from outside can mean that getting the company the visibility it requires falls on the founder only.
It’s a risk of course, but it does allow for complete control of the business.
No outside influences could be of benefit to some, but, as the business grows, outside investment will have to be brought in.
Friends and Family
Friends and family need to get involved at the Idea Stage, because those closest to you are likely to be the ones who want to see you succeed.
You’ll get as much money as they have to give, often without a moment’s hesitation, and remember that almost all won’t want to be involved in the day-to-day operations of the company despite being ‘investors’ for all intents and purposes.
Look after them as and when your company value increases, remembering that they will have been as important as anyone else at getting the business off the ground.
This is a relatively new phenomenon for capital fundraising, but finds itself as a viable source of investment simply because investors appear to be spending less money in the Seed Stage.
With best practice being regularly discovered by entrepreneurs at this stage, the approach from startups will continue to be refined.
Market validation and other issues raised by this point ensure that entrepreneurs will require additional funds in order to sustain their current growth, with perhaps the option to explore other avenues too.
As a start point, and for the immediacy of receiving funds, crowdfunders have become one of the fastest growing ways for any business to grow.
Pitch your business idea or product well, and there’s every chance that without having to lose any equity in your company, you’ll have thousands of new investors from around the world.
Crowdfunding isn’t for everyone, but it’s true that some startups have received millions of pounds in this way, and the ‘hands-off’ approach from investors isn’t going to impact your actual day-to-day business operations.
Incubators / Accelerators
When still in the Pre-Seed Stage, businesses can apply to to receive a number of benefits from incubators or accelerators.
Strong industry connections, business mentorship, state of the art working environement and the opportunity for seed funding can all be expected if the company is invited to participate in one of these programs.
Significant competition mean that it’s very difficult to be accepted into a startup incubator or accelerator.
It’s not a guarantee of success either if a startup receives funds this way.
Small investments of £25,000 to £100,000 are typical of the angel investor, who are individuals rather than companies.
A high return on investment (ROI) is always expected, and the angel investor will likely request to have a bigger role, for example a seat on the board or a say in the day-to-day operations of the company.