Getting money for a start-up is one of the biggest challenges right at the beginning. Thankfully, venture capitalists and investors are all in for funding promising start-up ideas. Despite this, finding the right investors for a start-up can be a tough ordeal.
Here are a few potential tips that might help:
Do Your Research
Just because someone wants to invest in your start-up, does not mean they are the right investors. It is always better to do research and set up a target list. Go for investors who have some experience in that market segment and have a penchant for your start-up. It is also advisable to do a proper background check to make sure they have no conflicting investments that might compete with your business. Once you do the research, you will have a better idea about the type of investors you are looking for and the right people to rope in.
Find connections to have a better shot
Once you have identified your target list find mutual connections that can help you get a better shot at reaching out to the investor. Established investors must receive a dozen other requests for funds, and starting out from the clutter might be difficult. Finding a warm way in through a common friend or acquaintance might help your case better and help you attract higher interest from the investor.
Once you have got through to the investor and are pitching your idea, make sure you walk into the room fully prepared, ready to answer all questions. Your pitch can impress an investor right away, and for that you need to address all the points relevant. Be very clear about the margins, growth potential, and business model, the problem you’re trying to solve with your start-up, your competitive advantage and your differentiating factor. While an investor invests because they believe in your idea, but the fact remains is that earning money on their investment is a priority. So, addressing these concerns accurately and confidently can go a long way in impressing and securing investors.
Build a good relationship
Once you have finalized a deal with an investor, make sure that the relationship is sustainable and amicable in the long run. Work out all equity deals and voting rights agreements in a diligent manner to avoid any future conflict. For you to establish your vision and the investor to continue investing, there needs to be mutual drive from both the sides. Try resolving any conflicts as soon as they arise and clarify if any misunderstandings pop up. Having a good relationship in the long-run can help you get successful in your business and in other potential endeavors as well.