Starting a small business is an exciting time. But consider that startup funds should not come to you, business owners or through regular bank loans. There are ways to take some stress out of your finances, either through investors who make money only when the company makes a profit, or take out loans with low interest rates.
Give Investors a Reason to Reach You
As much as your company wants to find great investors, investors also want to find great companies – meaning courtship goes both ways. Therefore, make sure that you are spending some time there yourself. Even if your product is not live, you can attract attention through thought leadership to your team and your mission. Another adtech company Degreed did a great job of this pre-launch, writing guest posts for tech blogs and starting a conversation on Quora. After StartupDigest shared a personal blog post of mine, I had several investors who introduced themselves and asked to meet.
Now, even with the best fundraising strategy, be prepared to be turned down by investors or not to listen back. Do not let that get to you, but don’t be afraid to be diligent about following professionally. If you do not return in a week, send a quick follow-up. After that, if and when you have news to share (such as a product launch, key metrics you hit, a commitment from a notable investor). This also applies to investors with whom you have met, but it has not been heard since.
You’re going to hear a lot of “nos” – but this is the first time you say “yes!” Let’s hear. It is more exciting.
Find Angel Investor Network
Angel Investor Networks are member-based networks that serve by location. They are often working from a fund set aside by an investment firm to source deals for the network. Applications are predetermined, angels can retain their anonymity, and founders may find themselves receiving offers from a hundred investors for an enterprise (as opposed to personally going from angel to heaven).
friends and family
You might not be comfortable asking your friends or family for a loan, but you can offer to make them an investor in your business. If you are comfortable with a stakeholder whom you know at a friend or family level, this may be a great option for you.
The big bonus here is that they take your best interests into consideration and want you to succeed with your new business. Make sure you have signed an investor agreement with them and finish everything with an attorney to formalize the process, ensuring that there is no room for disagreement or down the line. You should pitch your business plan to them just like you give to any other potential investor.
Help from Universities
Many research-intensive universities are developing incubators and accelerators for current students and alumni, making it easier for new businesses to find funding within the university system.
You can reach your alma mater or a school to see the type of business you have if they have a program or money to invest. While this is a new practice among universities, it is catching on more and cannot hurt to see and pitch in a university to see if they can help you and your business.
Contact businesses or schools in your workplace
Chances are, you already know people similar to work. Perhaps you can connect with them to see if they have any recommendations that are interested in investing in your company.
This research process can take you a long time, as you are unlikely to be ready to invest in someone with just one phone call. In fact, you may have to call a lot of people or even network industry events. But, if you keep digging, then you can just be introduced to certain people, who like your business plan or product.
Saying that, schools that offer certificates, diplomas or degrees in your area is also a possible way to reach potential investors. This is because often professors teaching programs invite guests to speak on certain topics. Typically, these guests are experts in their field. Perhaps you can see that professors or someone from the department will reach these guests on your behalf, to set up an introduction.
Through industry friends
If you know of other founders of companies like yours in your industry who have found investors, ask them about their recommendations. Just as many investors specialize in specific markets, such as biotech, retail, travel, or developing mobile apps, they find companies through networks. So protect yourself within those networks, do your research on angel investors working in your field, and try to get an introduction.
Give Investors a Reason to Reach You
As much as your company wants to find great investors, investors also want to find great companies – meaning courtship goes both ways. Therefore, make sure that you are spending some time there yourself. Even if your product is not live, you can attract attention through thought leadership to your team and your mission. Another adtech company Degreed did a great job of this pre-launch, writing guest posts for tech blogs and starting a conversation on Quora. After StartupDigest shared a personal blog post of mine, I had several investors who introduced themselves and asked to meet.
Now, even with the best fundraising strategy, be prepared to be turned down by investors or not to listen back. Do not let that get to you, but don’t be afraid to be diligent about following professionally. If you do not return in a week, send a quick follow-up. After that, if and when you have news to share (such as a product launch, key metrics you hit, a commitment from a notable investor). This also applies to investors with whom you have met, but it has not been heard since.
You’re going to hear a lot of “nos” – but this is the first time you say “yes!” Let’s hear. It is more exciting.
Look closer to home
Because many angel investors prefer to play an active role in the business they invest in, they prefer to invest in businesses that are closer to home. “An envoy wants to pass, so they can drive to talk to principals,” says Jim Orgill, managing director of advanced technologies for the Business Development Bank of Canada.
Do your research and compile a list
Take a list of your immediate network of industry people, and compile a list of investors that they suggest will align with your vision and goals. With thousands of venture capitalists across the country, all of you need a solid list of 30 to 50, which can give you the attention and capital investment you are looking for – and the best recommendation.
Tap into your network’s investors, reach out to them in a low-stakes environment, keep your ideas, solicit feedback and always incorporate your advice into your next pitch.
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