Every business idea needs a solid financial footing to get launched. After exhausting the goodwill of every family member and your friends, entrepreneurs have to try new ways to find investors to land the funding they need. This article shares several strategies to help aspiring businesses find investors and fundraise.
Your business needs capital to grow. Typically, the first investors (after yourself) are people who know you well already. But, your business idea could keep growing even after you’ve tapped your contact list. Really, that’s what you’re hoping for, right? So, then you need to try new avenues to find investors, including:
- Pitch night events
- Participating in incubator events
- Angel investors
- Venture capitalists
When it comes to finding your investors, it helps to start small and work bigger. These strategies reflect that idea.
Looking for local investors in your community is a good place to start. Networking opportunities abound:
- Industry associations
- Chambers of Commerce
- Meetups for your industry area
- Co-working spaces
- Specialized affiliation groups (e.g., Women Entrepreneurs or Veteran Business Association)
Not sure where to find these groups? Try online directories, use your social networks, and attend conferences. You might also search competitor websites and see what organizations they list participating in.
This networking can pay off in terms of finding investors but also by helping you develop relationships that support your funding goals. For example, at that local Small Business Administration workshop, you might not meet any investors, but you can get to know people who can connect you to them. These warm introductions can help set your interest meeting off on the right foot.
Pitch Night Events
Attending events helps you gain visibility. Participating in pitch nights allows you to present your idea. You’re going to need to practice to pitch well. So, the more you pitch, the better you’ll know what works and doesn’t in garnering investor interest.
Different investment groups will host pitch nights, perhaps monthly, quarterly, or annually. Some industry conferences will also have a pitch event on their schedules, so look there too.
Participating In Incubator Events
Accelerator programs are geared to providing startups with the tools they need to be successful. Startup accelerators can be run by non-profits, business schools, civic groups, the government, and others. They will host incubator events to help entrepreneurs problem solve and succeed.
You can apply to develop your work as part of their incubator events. Often, you get funding to continue work on your business as well as access to business advice and mentoring. You’ll also meet other entrepreneurs looking to jumpstart their business success too.
Several online sites let individual investors contribute to ideas that inspire them. You can look for donations (e.g., Kickstarter, Indiegogo) or offer equity in return (StartEngine, WeFunder, SeedInvest). In 2020, equity crowdfunding in the United States raised $214.9 million (a 105% growth from 2019). The number of investors in equity crowdfunding increased 75% from 2019 to 358,000.
The advantage for you? You are going directly to investors and not having to bother with a middle man. If your idea catches on, you could also quickly generate a lot of money while simultaneously raising brand awareness. However, know that according to startups.com, only 50% of campaigns are successful.
What is an angel investor? We covered that in a recent article, but in short: they’re wealthy, not winged. Typically involved early in the business generation process, these individuals or groups put money into startups before they are proven and scaling up.
You may never need to partner with a venture capitalist (VC). Perhaps all your previous efforts finding investors will get your business where it needs to be, generating revenue without the help of these large-scale investors. Typically responsible for a large pool of funds, VCs get involved later on in the game. They provide major sums of money to help a thriving entrepreneur scale up faster, more effectively.
Finding Investors Means Pitching Investors
Working with friends and family, you don’t have to prove your business idea with the same rigor. But, once you move beyond your immediate contacts, you’ll need to get out there and persuade between investing in an untested idea or startup business model.
You’ll need a business plan, a company mission and vision, and clear goals. And you need to communicate it all concisely and clearly. Make sure you have an online presence potential investors can research. Look for a future article sharing tips on how to effectively pitch your idea to investors.