Looking for Investors – Overview
The key to getting a new venture off the ground is having the funds in place that you need to launch it properly.
When looking for investors, it is important that you explore both traditional and non-traditional methods of financing your business.
A good idea isn't worth anything unless you have the resources to bring it to fruition.
By looking for investors in as many areas as you can, you increase the odds of finding the right investor or group of investors for your particular business or venture.
Image Source: Ways to Find Investors for Your Venture
It is important to remember that it is not always a matter of simply looking for any investor, but of finding the right fit between the financing party and the business.
Looking for investors whose interests, past investments or values align with your own is always a good tip to keep in mind.
6 Ways to Find Investors for Your Venture or Business
Angel investor groups exist in areas throughout the country. These are groups of wealthy organizations or individuals who are actively on the lookout for new opportunities to invest in.
• When looking for investors, look for angels with values in line with those of your organization. You should be able to articulate not just what you're doing, but also why you're doing it to convince someone to invest in your company.
• Have a short, articulate pitch for your company. Angel investors are often approached by many, many groups and companies looking for funding. You should be able to articulate your idea in a short, punchy way.
• If your initial pitch works, the door will open. At that point, you need to be prepared with a complete and comprehensive business plan.
Venture capital firms specialize in investing their client's money in startups that they feel have the potential for large success.
Venture capital is the road to take when looking for investors if you have a proven product or demo, and are looking for large amounts of capital.
Image Source: Looking for Investors for Your Business
This is a good option for those looking to start a large scale operation with the potential for significant, long-term profits.
Investments in this category are typically measured in millions, and are not the best fit for a smaller startup.
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When looking for investors, crowd-funding is a great way to get a large group of people to invest in your venture.
There are different ways to go about crowd-funding a project or a business, depending on the scale of your idea.
• Self-directed crowd-funding: Using a platform like Kickstarter is a great way to raise a small to medium sized investment to help get a new venture off the ground.
• Larger, institutionalized crowd-funding services are available from specialty companies that will help you gather together several like-minded investment groups to fund a larger company or startup.
Friends and Family
There are some hazards you may encounter when looking for investors among friends and family, but there are also some advantages.
• The potential investors already have an inherent trust in you, which is an advantage.
• Be sure to explain the risk of your idea or startup beforehand. Be as honest as possible about the potential upsides, and potential failure points.
• Be sure to spell out the terms of the investment very carefully, in the form of a real contract. That way, the business is kept separate from your relationship, and as long as you keep it professional and within the terms of the contract, it should help avoid hurt feelings or resentment down the road should something go wrong with the business.
When looking for investors, you may be able to find a business incubator willing to take a risk on your business.
These companies typically invest in companies by offering resources rather than cash. There are many advantages to this type of investors:
• Some provide business space or offices for free, often one of a new business’s larger expenses.
• They may provide shared resources such as access to technology and equipment.
• Some may provide hands-on consulting and management advice, which can be very helpful, especially to someone new to starting their own business.
Never underestimate the power of your network to find the right investor for your business. It is very difficult to operate in a vacuum.
However, if you network diligently, and put it out among your contacts that you're looking for investors for your new business, you may be able to get suggestions, ideas or inquiries based on those conversations.
Word of mouth is often one of the best ways to attract an investor, especially to a small business without a track record of success.
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