It’s not as difficult as you, as an entrepreneur, to imagine figuring out where to go for small business investors.
Finding investors is less of a hassle than it once was due to the proliferation of online resources and startup incubators around the United States.
Financing your business at any level requires understanding the many types of investors, the services they provide, and the best way to locate them.
We’ll describe the various categories of investors and help you determine which ones make the most sense for your business.
We’ll also explore the many channels available to reach out to investors, including:
- Demo or pitch days
- New connections
- Online resources
The Four-Step Process for Finding Investors for Your Startup
You may do a few things when trying to attract investors for your small business.
1. Take part in demo or pitch days
Demo days, often known as “pitch days,” put up-and-coming businesses before a panel of potential investors.
The format of these days is similar to that of the TV show “Shark Tank”: business owners pitch their ideas to a panel of investors, who then try to learn more about the company before scheduling further meetings or negotiating the terms of a deal.
Following investment groups and startup incubators will help you identify events where you can pitch your business concept.
There are many different kinds of pitch events, but several common
Many capitalists travel to trade exhibitions, conferences, and other such events.
Investors that are looking to finance companies in your industry may be in attendance at these events.
2. Connect to Your System
Using your network to seek for financial backing for your startup is a straightforward strategy. Get in touch with other business owners you know and see if they can refer you to investors, they may have dealt with before. Many investors will put their faith in a person they have previously worked successfully with.
Find out if any of your fellow alumni from the institution you attended can lend a hand. Many alumni have a strong sense of loyalty to their alma mater and to one another.
There are also university-based startup incubators and accelerators to connect entrepreneurs like yourself with a pool of potential investors.
Small Business Development Centers, trade associations, and chambers of commerce have contacts in your area.
For investors seeking opportunities in your field or region, they could be a gold mine of information.
3. Get Out There and Meet New People
When figuring out where to go for financial backing for a startup, you may need to take matters into your own hands.
Cold phoning, emailing and scouring social networks like LinkedIn could lead to possible investors, but these methods are far from foolproof.
Your chances of obtaining an investor will increase if you are familiar with their history, tastes, and needs.
4. Incorporate Material from the World Wide Web
Consider the wealth of information available online while trying to figure out where to start looking for investors for your startup.
For instance, online crowdsourcing platforms like Kickstarter can be used to raise money for niche projects and fill in the gaps left by traditional investors.
As an example of a product-driven crowdfunding platform, Kickstarter allows you to offer the product as a reward for investing.
Because of this, you can maintain control of your company’s equity.
If you’re looking for investors online, you can do it through platforms like FundersClub and AngelList Venture.
Individual individuals or groups investing under the direction of a single leader form what is known as a “syndicate” on these platforms.
These organizations will likely want to speak with you at least once to assess your company’s viability.
Convertible notes, a form of finance that can convert to equity at particular stages in the business agreement, are frequently offered by them when working with startups.
To attract investors, companies can also issue SAFE (a simple agreement for future equity) notes that entitle holders to buy a predetermined number of shares at a predetermined price.
Diverse Investors for Small Businesses
Individuals and organizations wishing to invest in small businesses are looking for companies they can back that they anticipate will generate a high return.
Ultimately, they both want to make money.
It’s common for investors to focus on a narrow set of sectors or business types.
An investor with a track record of working only with construction firms is not the best fit to fund a new restaurant.
While some investors are driven by financial gain, others support entrepreneurs based on their race, religion, or socioeconomic status.