Before the long road starts, it’s essential to answer one important question: “Are you, as a founder (or founders), ready to give a 20-25% share of your company to an investor at every fundraising round you plan to participate?” And if the answer is positive, then you go in the right direction to find the answer for how to find investors for startup. According to recent survey stats, 27% of businesses claim they don’t get the business funding they need. In this regard, seed-stage venture investors’ engagement and fundraising are the best practice to overcome this limitation and give your newborn company a chance for life. Generally, promising seed startups gain from $ 0.5 -1 million at fundraising events, which is enough for reaching the first business milestones.
Some fundraising stats to consider. According to Crunchbase, in Q3 2019 $4.44 billion was invested across 5,875 angel and seed-stage deals. Angel and seed-stage deals are a big part of the global venture landscape, accounting for nearly 65 % of deal volume in Q3 2019.
So, the chance to raise exists and may become closer if you follow several recommendations and tips on how to find investors for a startup given by a professional investor.
So, How to Get Your Startup Funded?
1. Look for the relevant startup investors. Try to reach those people who invest in your startup sphere. Visit thematic events dedicated to your target market. Look at fundraising platforms for angels in relevant categories. Also, it’s a good idea to visit fundraising events and search for live contacts with people. Nobody can deny the importance of such a channel as networking for finding and reaching people that you need. It’s crucial to visit conferences from time to time to become cognizable among industry specialists and influencers. Investors begin to recognize you and see that you are serious about what you do. It’s very likely that your new contact will introduce you to the very person who will be interested in your startup. It’s essential to realize that in the venture capital investing sphere, where money works, recommendations and references shouldn’t be underestimated. To learn more about the necessity to build your business contacts, read further.
2. First, search locally, then go globally. Search for the most dynamic angel investors for startups in your region. Often, it’s easier and cheaper to start from where you are physically located. After reaching the first business milestones and becoming an early-stage startup, it will be more likely to interest the investor that you need.
3. Start early, wait patiently. Start to gather your potential list of investors and build your business connections a year beforehand. The longer you can wait to receive financing, the higher your amounts of the investment may be. The earlier you start to be seen at the events, the quicker you’ll gain what is called a credit of trust. Visitors who are also serious about their intentions to invest will see that your startup is not a one-day caprice, but a serious purpose.
4. Don’t forget about governmental financing programs. There’s a variety of them, starting with different financing and operations assistance programs to small businesses, ending with grants for the implementation of social projects.
5. Play a role. Stand out in the competition for the investor’s attention. Think about things that attract attention like colors, light, and sound effects. The speaker should pump up the presentation skills. As they say, investors won’t give you money only because they liked you personally. But for sure, they won’t invest if they didn’t like you personally. So, it’s all about psychology. And what they look at when choosing startups? Estimating the startup, a potential investor will look at the team, MVP (minimum viable product), startup business model, leader’s management skills, scalability of the idea, available market, technology, and some other things.
6. Provide a solid plan. Show in the Pitch how you’ll spend the raised money. Presenting your Pitch proves investors that it’s valuable for the potential customer. Also, it shows that you are able to develop and fulfill the go-to-market plan.
7. Show your team. It’s fine to express yourselves as the team when going to the stage. Share your leader’s authority, let members answer questions within their knowledge and skills or present a part of the Pitch. Show your trust to them right in front of the jury, investors, and the audience. It’s great if MVP is presented by technical-minded people. They can answer questions on the fly. But what if your team lacks such people? How to find a software developer for a startup? And for live presentation? You’d better take advantage of outstaffing for live team presentation to investors on fundraising events.
8. Show that you burn with the idea. “You have to be burning with an idea, or a problem, or a wrong that you want to right. If you’re not passionate enough from the start, you’ll never stick it out.” S. Jobs. And that’s quite right. Still, it’s not just the idea that matters. The product must bear value to customers or solve a customer’s problem as 42% of startups fail because of a lack of market need. Be sure, investors can determine quickly if there’s a real market need for your startup.
9. Avoid red flags. Every seed or early-stage startup tries to look most presentable. But it’s not good to hush up the risks and problems. A startup must be ready to speak frankly with the investor about such kind of things, at least tet-a-tet. Do not pretend that everything is fine and there will be no problems with anything, it is better to speak as is, especially since investors estimate risks when deciding to collaborate or not. Not providing the info may show you are non-professional, immature, and not ready to face and solve problems, current and future.
Finding investors for your startup may become a challenge. We thank Greg Albrecht, Strategy & Leadership Advisor, Investor, and Public Speaker and Blogger, for a valuable and practice-oriented speech at Startup Meetup in Imaguru (Minsk), that inspired us to collect these tips to help you to achieve this ambitious goal.