I’m not gonna start off by telling how tough and frustrating it can be to secure funds for your startup. I’m sure most of you, after having gone through this painful experience, already know the troubles and obstacles one faces while treading the path of raising capital. If you don’t know about this or think getting access to unlimited funds is a walk in the park, then you should look for other avenues to explore.
The business world is like an ocean; abundant in resources, but the thing that separates entrepreneurs who succeed in raising funds from this ocean is that you should know where to look for the right sources to finance your venture, what kind of investors to target and how to win them over so that they may happily fill your coffers.
In this article, we scratch the surface of some of the ways by which you can spellbind investors towards your idea and sway them to finance your startup.
1. Know Potential Investors
Initiating efforts to secure funding for your startup begins with you, conducting a detailed research on your potential investors. Answering questions like “Have your target investors invested in similar businesses as yours?” or “Does your business model aligns with theirs?” will make things easier for you. In addition to this, you can easily know their preferences; this would help you in customizing your pitch according to what will sell your idea to a specific investor. Simply put, the better you do your homework about your investors, the greater will be your chance of hearing potential investors say, “Take my money!”.
2. Focus on your Future Business Prospects
In order to acquire funds for your startup, you need to think like an investor. Why would anyone invest in your business? An investor will only put their money in your business if they see the growth opportunity and better return on investment. As a business owner, you need to highlight the potential and future prospects of your business when pitching to investors otherwise; you’ll miss the sweet spot and won’t be able to pipe the required funds that you require to jump-start your business.
3. Pitch Your Business in the Best Way
Pitching your business in front of investors is an art. The success or failure in securing funds for your startup depends entirely upon how you pitch your startup. In an article written by Neil Patel, online marketing expert, he shares some valuable tips to make your pitch so good that investor will not brush it aside. According to him, you should highlight unique selling points of your business when pitching and keep your pitch as concise and focused as possible.
More importantly, you should explain your business model to investors. He also suggests that you should try to come up with a story that can make your business pitch unforgettable. This will help you to convey your message in a better way. Additionally, you can arouse an emotional positive response from the investor increasing the chances of securing the funds.
4. Be Realistic About Sales Forecasts
To grab the attention of the investors, many young entrepreneurs tend to exaggerate things, which is not the right way to go about it. Due to this, they end up promising more they can deliver and this puts extra pressure on their nascent startup. You should have a realistic budget at your disposal and a solid plan that delineates how you will go about enticing new customers to generate healthy and positive cash inflow for your business. If your plan and forecasts cover all bases, securing funds from investor will be much easier for you.
5. Form a Strategic Partnership
If your products and services impress everyone, then your suppliers, distributors or customers might be ready to fund your startup. This leads to the creation of the strategic partnership. With so many startups emerging and some of them making a name for themselves, these stakeholders will be interested in being a part of your startup’s success. That is why you should always maintain good relations with all the business stakeholders. They could become your future business partners as well. You can also benefit from their experience, knowledge, and expertise in a particular domain that could help your business to grow.
6. Use Technology to Your Advantage
With the power of digital marketing, acquiring funds to get your startup off the ground is easy. Unfortunately, most entrepreneurs do not recognize the power of digital marketing and fail to take full advantage of this. Small steps such as maintaining a strong social media presence can go a long way in helping you rope in investors. You can also know your investor in a much better way through social media. This will help you to connect in a much better way with your investors when pitching your business.
All you have to do is to pick the right social media platform where your potential investors are. The popularity of crowdfunding platform has opened new doors of opportunities for startup fund seekers. Show your investors that how you will achieve your milestones through and you are one-step closer to securing your funding. Many startups have propelled themselves to celebrity-status thanks to crowdfunding platforms like Kickstarter and your startup could be the next one.
7. Build a Functional Prototype
Another way to get your startup funded by an investor is to show them a functional prototype of your product. Although, it is one of the costlier options and falls in the category of seed stage funding, but it will surely convince an investor that your idea actually works– seeing is believing. To keep the costs down, you could restrict the prototype to basic features just for demo purposes. A visual representation of how your product works will show the investor what to expect from the real product and increases the chances of your cash register go ka-ching—well, sort of.
Whether you are looking for seed money for your startup to hit the ground running or want some cash to take your startup to the next level, you can easily get finances by following aforementioned tips. Focus on factors that differentiate your business from competitors and show investors the growth opportunities and future prospects of your business with realistic budgets and plans. Try to know your investors as much as possible and present your business proposal effectively. Lastly, have a strong social media presence and use crowdfunding platforms to get your startup funded.