You took a step which many startup enthusiasts fail to take – launch a startup. That’s a good start. As per a Vistaprint 2018 survey – 37% of non-business owner respondents genuinely want to start their own business. Another 25% of the respondents are seriously considering becoming their boss soon. It means 62% of the non-business owner respondents dream about starting their own business. Yet, most of them don’t take any concrete actions towards their goals. They fear financial uncertainties and their inadequate knowledge about business funding makes them feel vulnerable to failure.
Now, you are wondering how to raise capital for your business. We are here to help. In this article, we will show you how to find investors to create your investor lists. You will also learn how to raise capital for your business from this article.
Finding Investors – What to Look for?
Photo Credits: MoneyControl
The process of finding investors for your project can be a bit too much for startup companies. But a startup founder can carry it off with detailed research and planning. There’s no doubt that the overall process of finding the right investors for your startup can be a bit overwhelming. Yet, putting in extra efforts can do wonders for your startup fundraising. If you ask the successful entrepreneurs of today, they will tell you that finding investors can be a daunting part of the startup journey. It is equally important at the same time.
Before we tell you where to look for investors, let’s look at some common mistakes in the process of getting an investor to make a business investment in your startup. The first and foremost mistake that startup founders make is that they pitch their startup to everyone. There are a few criteria that you must set before you start looking for an investor. Some of the main criteria that you must use when zeroing on investors are the following:
#1. An investor must have a track record of investing in the companies from your startup’s domain.
#2. They must be willing to guide you to develop your startup.
#3. Last but not least – They must be ready for a financial agreement that is fine with all parties involved in the deal.
The Company Stage – An Important Factor Governing the Process of Finding Investors to Raise Capital
Photo Credits: Hatch & Boost
A startup founder has a variety of investment opportunities to choose from. It depends upon the stage of your company’s development. Hence, the choice of funding option is directly related to the development stage of your company.
#1. Ideation Stage
In the ideation stage, a startup is still in development mode. An entrepreneur fine-tunes the core idea of the startup in this stage. Hence, bootstrapping or raising capital from peers and close connections is the most common funding option in the ideation stage.
#2. Pre-Seed Stage
Pre-seed is a comparatively recent addition to the world of capital fundraising. In this stage, investors put in a lesser amount of capital in a startup than what they would in a seed-stage startup. The entrepreneur uses the capital that they raise in this stage to sustain their company’s current growth. Market validation is the main task that the startup founders conduct in the pre-seed stage.
A startup founder can opt for funding options from the ideation stage too. The entrepreneurs can also sign up for an incubator or accelerator program at this stage. They can also leverage crowdfunding to raise capital for their pre-seed stage startup. Angel investment through an angel investment network is also a popular route to raise capital among the pre-seed stage startups.
#3. Seed Stage
A startup is in a seed-stage when it starts seeing traction. It means that the startup company starts acquiring customers. It is a stage where the company’s initial work from both ideation and the pre-seed stage comes to fruition.
The main aim of a seed-stage company is to gain market share. They also want to ensure that they can achieve repeated success. Due to the size of investment being in millions of dollars, a seed-stage startup must target investment firms here. The average amount of capital that a seed-stage company raises is $2.2 million.
#4. Early Stage
An early-stage startup is a company that has a consistent revenue and an established sales model. In this stage, an entrepreneur raises capital to scale the startup operations to meet the high demand for its service or products.
The most common option to raise capital at an early stage begins at Series B funding. An early-stage startup can raise fundings from super angel investors, late-stage venture capital companies, or through revenue-based financing.
#5. Growth Stage
A growth-stage startup is a company that has leaped through all the startup hurdles to achieve all the initial milestones. It means that they want to achieve a higher growth rate now. Hence, they raise more capital to boost their infrastructure and operations.
The entrepreneurs owning a growth stage company have a lot many funding options. In this stage, they have an option to raise capital from both the banks and the private equity firms. These options are not available to the early-stage startup companies. It is because the banks and private equity firms only invest in companies with proven business and revenue models.
Where can you Find Investors to Raise Capital For Your Startup?
So far, we have covered what to look for in an investor. We have also armed you with the knowledge about what kind of investments you can target. In this part, we will explore where you can find the investors.
Photo Credits: BPlans
There’s no doubt that technology has made it easier for everyone to develop relations without the need for a face-to-face meeting. Yet, one cannot discount the value of an in-person meeting and interactions. Even today, investors consider face-to-face meetings an important part of the startup funding process.
Want to meet investors and venture capital executives? Start attending startup and startup funding-related events. It includes pitch competitions, industry conferences, meetups, etc. A startup founder can network with other founders during these events and learn from successful entrepreneurs. These events can also help them meet with investors personally.
When planning which events to attend, expand your horizon to include events happening outside your city too. It will help you build perspective and valuable connections outside your local market.
#2. Professional Networking Websites
Today’s professional network sites are a great avenue to meet investors. These sites can help you build excellent relations with some of the top investors in the world. Investors can keep track of how your company is doing through these professional networking sites. They can also learn about the potential developments happening in your company through these platforms.
A startup founder has lots of options to choose from when it comes to professional networking sites. All these websites help build connections between entrepreneurs and investors. But you must choose a professional network site based on your industry, country, and specialization.
The most popular professional network sites of today are Funders Network, AngelList, Meetup, and LinkedIn. These platforms are perfect for startup founders to make important connections. The startup founders can also reach out to potential investors through them. Many of these sites such as AngelList and LinkedIn also allow startup founders to create profiles. It can help startups to build a following.
#3. Recommendations from Your Network
Nothing beats the old-fashioned recommendations from your connections. Your contacts from the industry can prove to be very effective when trying to get in touch with investors. The people that you work within the industry must have made many high-profile connections during their professional careers. They can introduce you to some of the high-profile investors in your industry.
#4. Leveraging Your University Alumni Network
Did you ever have thought of leveraging your university alumni network to connect with investors? If not then you must do it now. Today’s alumni network has evolved into a powerful force in itself. Many investors who studied at your university must themselves be a part of the alumni network. Hence, a startup founder can leverage their alumni network to develop relations with some of the top-most investors in the region.
Many VCs use their personal connections to find promising startups for investing. Hence, it is a win-win situation for both startup founders and the investors. Your university alumni network can get you in touch with these VCs.
#1 way to Find Investors to Raise Capital for Your Startup
If you are wondering about a way to connect with a large number of investors then you should check out online startup funding platforms. They allow you to connect with a large number of investors. You can try out platforms such as our own CrowdCreate. You can use CrowdCreate to find both investors and influencers as our proprietary database is one of the largest active databases of its kind.
The online startup funding space has grown rapidly in recent years. Many high-profile and accredited investors, banks, VC funds, and private equity companies have joined such platforms. All investors are looking to fund projects with high potential through these platforms. The main ingredient to achieve success on an online startup funding platform is to find the right investor for your startup. You must be realistic with your expectations to raise capital from online startup funding platforms.
Finding investors and getting them on board to invest in your startup is a lengthy process. It requires a very high amount of research and preparation. You must know your company requirements thoroughly. Only then, you would be able to find a perfect investor for your startup.
We understand that the process of finding the right investor for your startup can be a bit overwhelming. That is why CrowdCreate is here to help you. We have worked with some of the largest companies in the world to raise funds from investors globally. Looking to find high-value investors for your startup? Reach out to us today for a personal consultation!