What Not To Do When Trying To Attract Investors To Your Startup
When raising funds for your business, you have a variety of options ahead of you.
You could apply for a loan, launch a crowdfunding campaign, ask friends and family, or seek out potential investors. Valid methods all, and you should research each method when looking to secure capital for your business and startup costs.
For the context of this article, however, we are going to focus on investors. Typically, these will either be angel investors or venture capitalists, and you can find out more about each type of investor in the linked article.
While there are differences between the two types of investor, the way you attract them are pretty much the same. With that in mind, here are some things you should never do.
#1: Go to them without a business plan
No investor in their right mind would trust you without a business plan. After all, why would they give you money if there was little evidence that they weren’t going to make a return on their investment? You need to prepare a business plan in lieu of any meeting with them, detailing your business goals and how you plan to achieve them, and market research reports to show the investor that there is a demand for your product or service. When the investor has evidence that you have actually put thought into what you are doing, and when he or she can see that there might be a potential return in profits for them, then they are more likely to consider putting money into your business.
#2: Show little passion for your idea
If you don’t have passion, then you can’t expect the investor to get excited about your business idea either. In fact, you can almost guarantee that they will reject your pitch, as, without any excitement in your voice or manner, they might assume that you aren’t taking your business very seriously at all. You need to show enthusiasm and love for whatever it is you are pitching to them, letting them know that this is a priority in your life and that you will do whatever it takes to make it work. Read this article on pitching to investors, and follow the suggestions within to help you win them over to your side.
#3: Refuse to let them participate in your business
Especially when you are dealing with venture capitalists, you are dealing with people with experience in the business. They might have ideas on how you might run your business, and it is probably worth your while listening to their advice should they give it to you at your initial meeting. If you ignore them or show them that you are only interested in their money, then they might decide to take their money and their expertise elsewhere. If they do express an interest in your business, you might also ask them if they are willing to join your board of directors, as this opportunity to participate might give them a further incentive to invest in your business.
Final tips
Once you have found an investor, you need to make an effort to keep them in the loop about your business. This might include using an investor portal to share important documents with your investors and holding annual meetings to keep them abreast of any news. By doing so, and assuming that all is going well within your business, you might be able to dip into your investor’s pockets in the future when you need any further funding for your company.
We hope this article was useful to you but continue your research online for more advice. And be sure to let us know if you have any further tips for our readers.
Providing a daily digital source for motivation and inspiration for the perfect work/life balance.
Responses