There are many reasons for a business to turn to investors from outside for capital. This is most common when it comes to startups, but even in larger companies.
Investors can be family members, friends, family as well as angel investors as well as venture capitalists. Startups typically choose to work with investors as often as they can since it’s difficult for them to obtain business loans. Smaller businesses that are established will sometimes look to investors, even if that involves sharing ownership instead of traditional credit for business.
Here are 10 Mind Blowing Tips To Get You Investors for Your Business
1. Don’t use the term “venture capital” if you’re referring to angel investment or even friends and family financing
A lot of people make the mistake of using the wrong terms to describe the kind of funds they’re looking to obtain.
Venture capital is one of the subsets of investment outside, and is the most difficult to obtain. If you are required to inquire whether your company is a potential venture capitalist but it isn’t. Angel investments are not capital. The money that comes from friends or family does not venture capital.
Additionally, it’s crucial to be aware of the differences. Begin with this article about the distinction between these two types of funding. from now, I’ll talk about mostly angel investors with some friends and family financing. As you’ll discover in the article venture capital is rarified air, and quite specialized.
2. Don’t make any purchases in bulk
When looking for funding, steer clear of templates for emails like the plague. The most discerning investors won’t even look over executive summaries or listen to a pitch, much less look over a business plan if it appears to be delivered in bulk to multiple investors.
The idea originated in the 1980s when people thought that investors were watching business plans that were not being solicited. In reality, they weren’t but they did pretend that they were. No longer.
3. Do your research first.
To get funding from family and friends, which I’ve never attempted, the best suggestion I’ve heard is not to ask them directly if they’d like to decide to invest in the business or not. Instead, you should describe the company and ask them to name someone they know that might be interested. This is less awkward in great measure if you know that your customers aren’t interested. They can say they’ll think of people who might be interested, and not state specifically that they’re not. If they’re interested, then it’s an opportunity to make a statement about it.
Angel investors should determine your target market prior to proceeding. Select a handful of angel investors or groups that are investing in the amount you require in your field in the current stage of development, and in your particular region.
Angel Investors and Groups possess their own distinct preferences, interests, and personal characteristics. They have their own preferences regarding the places they invest, when they invest, and in what amount. They have websites and the majority of them have their own preferences listed. The websites don’t wish to interact with anyone who isn’t part of their particular category and aren’t aware of it. They want you to be aware.
The Angel Capital Association lists investors and investor groups. It also offers statistics, tips as well as general information.
You can also use the internet for leads that are local to you (search “angel investors [your location]” and leads that are specific to your industry (search “angel investor [your business type]” ). Finally, you can sign up on Gust which is open to small and startup enterprises, to access the profiles of investors who are angels as well as the listings of angel organizations.
4. Don’t be fooled by the companies which prey upon hopeful entrepreneurs by offering databases, leads, and the like.
Contacts are already being affected by uninvited messages and phone calls. This isn’t the way it works It has to be one at one time.
Additionally, there are companies who take your money under the claim that angels (or more likely, VCs) will browse your account and see that they are ripping you off. The deals chase the money. it’s not the money that chases the deals.
5. Begin by contacting a few targeted angels or groups just one at one time Be careful
Be patient. Begin by contacting acquaintances who have connections with them, alumni relations as well as business associations as well as their public speaking schedules as well as any connections with the businesses in which they’ve invested before.
Do not be afraid to submit groups via their web contact form or their switchboards, but treat it as only a last possibility. Chances are higher if you meet their standard profile and had the opportunity to meet one of their partners or have an introduction from someone they already know.
6. A very effective tag line and an instant summary
Begin by presenting your elevator pitch. You’ll make sure you have the main points in place However, the suggested sixty seconds in the standard elevator pitch is simply too long. It is essential to present your company’s mission in just a couple of sentences and the sentence must be engaging.
People have enjoyed success in “the [some well-known business] of [some new business area].” For instance, Alibaba was called “The Amazon.com of China.” I was able to meet a business that claimed to be “the Netflix of kids’ toys,” and, with this, the idea was immediately apparent.
For more information on this, take a look at my five-part series on this section that starts with Personalizing Your Pitch and includes seven key elements in An Elevator Pitch and 5 things that are missing from most Entrepreneurial Pitches.
Don’t be relying on the time you have to spend. Try to accomplish it in just three words.
7. Make a fantastic, quick video or one-page pitch
Create a great, short video or one-page pitch and send it in the follow-up email after you speak with an angel, or request an introduction.
Expect the actual exchange of information to take place via the form of an email. The most likely follow-up to those quick three sentences is a short summary in emails. Today, a fantastic video is more effective than a summary of an email.
Secure it, don’t make it accessible to the public. A simple password system similar to Vimeo as well as one of the rivals is the best. The YouTube permissions based on email are dangerous because everyone has numerous email addresses today and the likelihood of confusion is high. Create a seamless experience. I’m also a fan of the LivePlan pitch, too. However, I’m also required to admit that I am biased because I am interested in LivePlan.
8. If your summary video — or summary memo works, then you can proceed to develop a pitch
In the real world, it happens that you get a call and you follow up with a video or a summary and sit patiently waiting for an invitation to present your pitch. It’s a slideshow sure, but it’s not the point It’s an opportunity for the angels to get to know you, check you out, meet your team, and hear your story.
There’s plenty of information about pitching on the site. Go through this. But don’t assume that the outcome of your pitch will be determined by the pitch. It’s not. It’s all in the pitch, its credibility of the pitch, and the assessment of angels of your prospects for the future. My personal favorite is my list of 10 things that I didn’t like about pitching I’ve seen.
9. Prepare a business plan prior to completing your summary or pitch
The screenplay is the business’s plan of action, it’s the pitch. Make sure that the plan isn’t too large or too formal as it’s likely not to last and shouldn’t be more than two or four weeks.
Don’t believe the myth of investors not having read your plan. The truth behind the premise of this misconception is that people can not be able to reject your business if they don’t read the plan, but they will not invest in it without having read the plan. Every business is able to raise money after being subject to rigorous research and exam first (they call it “due diligence”), and your plan is the main document that outlines the due diligence.
But, to be clear there are a few instances. If a famous, successful entrepreneur, like the ones we read about in news, pitches an idea to angel investors they already know, these angels will usually get the money without doing having to do the same due diligence.
Angels are competing for those deals. The problem is that those investors–the stars will then inform the general public that investors don’t even read business plans. If you’re looking for a template to start, Bplans offers a free download of templates for business plans.
10. Be prepared that the process will take longer than you imagine it will.
Due diligence on its own will mean many months of endless requests for additional documents. When VCs say yes, they actually say that they might but when they say that they might not mean no, they are really saying no.
11. Two crucial bonus tips
The first rule is to never spend on investments before the check has cleared the bank. There are deals that fail every time.
The second (the most important point in the whole list even though I placed it last) Select an investor just like you would choose an heir.
This is my recommendation. Let me conclude by offering this advice as the last word Take a look at 10 reasons not to solicit investment for your business.
The article in question is part of the Business Funding Guide: fund your business today, using Bplans.