New businesses have a high chance of failing.
Startup culture loves to talk about hopes and dreams and motivational this or that. But the reality is that 90% of new businesses/startups fail. Only about 10% survive.
There’s a million factors that can transform your idea into a business you’ve always dreamed about, but it doesn’t just happen on a whim. It’s your job to take control of as many factors as possible while offering an idea that is unique in your industry. You need a business plan and a marketing plan. And perhaps most importantly at this stage, you need the knowledge on how to raise capital and find investors.
No matter if you’re choosing to crowdfund your idea or you’re pursuing private investors and VC associates, choosing the right investors will absolutely define how your company will be run for the immediate future.
If you are looking for investors to launch your startup or scale your existing business, there’re several ways to start fundraising. You need to focus on first getting noticed by the people who have the capital you need to fund your next step and then you need to cultivate those relationships.
It doesn’t matter how big you get, every business needs more capital that will give them the financial leverage to grow at some point. Even the most well-funded, successful startups engage in more fundraising rounds than they ever have before in history. Having enough working capital to get to that next step is a vital lifeline for your business to have a chance to live to its full potential.
That being said, you probably won’t get that random (rare) phone call from a huge VC firm or the producers of Shark Tank. Those odds are, admittedly, super slim- especially if you haven’t already won the hearts of some well-connected investors. That being said, there are some ways that modern-day entrepreneurs like yourself are connecting with and getting noticed by potential investors.
Here’re just a few:
1. Online Crowdfunding Platforms
In the past few years, we’ve seen an entirely new space pop up online: the digital fundraising platforms.
These have become a viable option that is insanely popular with accredited, vetted investors, angel investors, and even some banks looking for new ways to expand their portfolios.
The major platforms are often peer-to-peer, offering business loans to donation based crowdfunding portals.
To use donation fundraising, try Kickstarter or Indiegogo. There are also equity crowdfunding platforms like:
Now, you don’t have to rely on these platforms to acquire funding in order to use them. These tools can be enormously powerful for brand awareness and garnering attention from investors.
The key is finding the right platform that matches your idea and specific needs and then being realistic about what you need to do to get a successful campaign off the ground.
2. Attend Events
Business success is based completely around visibility when you’re first getting launched- you need to get noticed by the best kind of investors for your business and cultivate relationships with these people.
Attending events is a great way to start building that network. Try to find out if any VIPs on your list are attending events ahead of time and schedule meetings to make it productive.
These can take the form of pitch nights where you present your opportunity and meet investors who are there to actively engage with founders, participating in coding ‘hackathons’, or attending organized networking functions and trade shows. Some of the prime events for early-stage startups include:
Get ahead of your competitors by taking a more strategic approach and start thinking about attending other events where your investors could likely be at. Things like charity fundraisers, film festivals are all opportunities to be seen and engage with the people you want to fund your company.
3. Use Social Media
Social media is a founder’s best friend in the beginning of any company. This is low friction and provides a lot of easy-to-work-with data upfront. Whether you want to test the market or attract investors- social media makes it incredibly easy to be discovered and remains a cost effective method of communication. This makes it an invaluable tool to connect with people and grow your network.
You can take an inbound marketing approach with your own posts and updates or be proactive and engage with influencers and run sponsored ads.
Direct messages are incredibly useful too. If you are able to get the social profiles of your creme-de-la-creme investor list, it might only take you a single message to connect with an investor ready to supply the capital your business needs. If you’re brave and confident enough to wing it one-on-one with investors right off the bat, here’s an article that lists the contact information for the top 50 angel investors based on the volume they invest.
If instead, you’re looking for venture capital firms, you can check out Crunchbase and research for the investors that are actively investing in your industry.
Having trouble choosing channels? That’s understandable, there’s quite a few and days/hours are short. To speed up the process here’s how to use the most popular channels for pitching investors:
-LinkedIn for cold messaging or to seek out quality introductions to pass the social proof with more guarded investors like Venture Capitalist firms. LinkedIn Premium is totally worth the fee for certain features- but you can get a free month to try it out.
-Facebook for meaningful connections. After you’ve met with an investor once or twice, you can establish a connection with them on Facebook. It’s critical to start building the relationship first in order to generate trust.
-Twitter for thoughtful conversation starters and engagement with relevant information shared by targeted investors.
4. Apply To Accelerator Programs
The most well-known of the startup accelerator programs openly invite serious entrepreneurs to apply. If accepted, you’ll draw a sizable check to keep developing your idea while being introduced to other investors, business advice, and help to stage future fundraising efforts. Take the time to understand the fine print and look for a good fit before you apply.
Most accelerator programs include a pitch day- where the startups involved pitch to a crowd of investors. Take the time to verify success stories and track records from these programs before you sign anything- you may be better off using those funds to create a board of advisors to help with making investor introductions.
5. Start Marketing Your Product
Your approach to fundraising needs to be strategic in order for it to be successful- which is why a lot of early-stage startups put all of their focus and resources into acquiring capital. However, far too many founders aren’t focusing enough on selling their product/service to customers (which puts your brand in front of investors).
If you acquire actual customers, this puts you under less duress to raise capital from outside sources. When you do raise capital, you get better terms from higher quality investors if your product already has a vibrant customer base.
If you find that sales are slow to come by, you can test various business models (like a freemium version) to help you get your product into the market and generate some buzz.
6. Local Entrepreneurial Communities
One of the very first things you should do once you’re ready to take your project out of the garage is to get involved with the founders that are around your space.
Join the regional tech and startup groups on Facebook and LinkedIn, attend local networking events, help out with organizing committees and most importantly– meet all the people that you can.
Don’t go out there and become a pitching machine, you need to establish those human connections, so bring a bit of personality and flair with you. Talk about the struggles in the life of an entrepreneur, get to know the other founders and investors, dig deep into the tech community around you.
When you connect with the community as a human first, you can forge those stronger relationships and work together to push each other across the finish line.
7. Angel Investment Networks And Groups
There are existing angel investors, investment networks, and angel investor groups that you can reach out to and directly pitch your idea. This may seem like the easiest way to meet angel investors without any barriers, but there’s a drawback: it’s also the least effective.
Angel investors are notorious for screening ideas before they even look at them, so unless you have an existing connection or advocate that knows someone or is in a network, your request will likely get lost in the thousands these groups receive every day.
How To Pitch Investors Once You Connect With Them
Once you’ve sealed the first meeting with an investor, you should get to work! You have to prepare a presentation to pitch your idea/concept. Investors look for key pieces of your pitch, so it’s absolutely crucial that you lay the groundwork for an excellent delivery.
Connect And Communicate
Investors are going to need to contact you and ask questions before you even meet if they’re excited about your idea. Make sure that you give them open communication channels- you can help build your relationship with these investors, which can be a massive deciding factor later on.
Find Your Advocate
Before you schedule a meeting with a potential investor, you should obtain an investor or an investor group. Try to find your ‘advocate’ inside of this group to help you draw attention to your idea and start a discussion or even engage individual investors- which can persuade them to consider the pros and cons of your startup.
Research The Process
Every investor follows a unique process when deciding on their investments. Get comfortable and familiarize yourself with this process as much as possible. Do your research, take notes and use this information to deliver key information at critical moments in your process with the investor.
Deliver A Memorable Presentation
The most important part of your pitch is nailing the presentation and delivering a strong engaging message to your potential investors. There’s several factors that make for a great presentation, but expertise behind your product and market, as well as confidence top the list. Additionally, don’t forget to:
- Become a master of the story. Potential investors aren’t your target customer– be sure to tailor your pitch/presentation for maximum engagement.
- Be Concise. Investors designate specific time slots for presentations. These are typically 10-15 minutes. If you stick to allotted slots, you communicate that you value the investor’s time.
- Cover The Financials. Investors can absolutely be swayed by emotions, but they are still investors. In order to establish trust, you have to cover the financial aspects as well as investor exit options in case your business doesn’t hit goals or generate revenue.
- Be Prepared To Answer Questions. When you wrap up your presentation, you must be prepared for the investors to bombard you with questions. Prepare to answer questions about anything from financials to operations.
- Aim To Build A Relationship. Not to Seal A Deal. Treating these meetings as a sales opportunity may be counter-intuitive, but it’s more effective. View these as opportunities to cultivate good relationships and establish a rapport with prospective investors.
It’s hard enough to get to meet investors and establish one-on-one connections with them, let alone get a meeting to present and pitch and idea. This can be a very stressful time in a founder’s life during early-stage startup fundraising and growth. It can feel as if you’re running out of time to make your business work, but take a deep breath and do things the right way.
You’ll establish more meaningful connections and have a more effective network if you approach this with a bit of ingenuity and strategy. Use these tips and work hard on perfecting your strategy and you’ll be able to elevate your startup to the next level before you know it and get the funding you deserve.
This is a guest post by Kristen Bowie, a marketing leader, forging the path with data-driven decisions. When she’s not writing for thought leadership and creating sponsorship proposals at Qwilr, she’s hanging out with her two urban dwarf goats, painting, or is out watching a local band.