About 82% of startups fail due to cash flow problems. For this reason, finding the right investors to hold your business up is imperative. Your business remains safe even during a financial crisis. But how do you find the right investors for your startup?
It all comes down to where you look and the criteria you use. An investor can make or break your startup because you partner with them for a long time. Here’s how to find the right investors for your startup.
Network all the Time
Investors don’t look for businesses to fund. On the contrary, business owners look for them, present their pitches, and convince them to invest in their business ideas. One place to find the right investor for your startup is social networks.
Social media platforms like LinkedIn are built for professionals and offer many opportunities. Also, be sure to attend in-person gatherings like business events and conferences. Build meaningful relationships with angel investors and venture capitalists to know how you can approach them for assistance.
Ask Family and Friends to Fund Your Business Idea
One of the best ways to fund your startup is to ask your family and friends to invest in your idea. These people are close to you, know you well, and believe in you. Moreover, they will be more lenient with you in case of delayed payments.
However, use this funding strategy wisely to avoid ruining long-term friendships. Know how much you need, prepare a solid business plan, pitch the idea professionally, and exaggerate the risk.
Did you know you can fund your business idea through small donations from internet users? Yes, crowdfunding has been popular for a while, thanks to the internet. However, this funding strategy is not for the faint-hearted because you must demonstrate the value of your business and how it benefits investors.
Make your product or service unique. First impressions are everything when dealing with strangers online, so make your idea likable. For instance, if you want to start a cab-hailing business like Uber, you can have a car stock photo library for investors to go through. You can crowdfund on crowdfunding platforms or on your website.
Pitch Your Idea to Private Investors
A private investor is a person or entity that funds businesses in exchange for equity in the company. There are two categories of private investors: angel investors and venture capitalists. An angel investor invests their net worth money into a business in exchange for equity. On the other hand, venture capitalists are firms that financially support startups in the early stages in exchange for partial ownership or equity. Before choosing an investor, understand the pros and cons of each.
Loans and Grants
You can also try applying for loans and grants from the government or other non-governmental institutions. For instance, you can apply for a Small Business Administration (SBA) loan.
While the SBA does not offer any loan, it connects you with an approved lender who will offer loans with good interest rates and repayment terms. The SBA also offers grants to individuals and organizations to promote entrepreneurship. Find out the eligibility criteria and try your luck.