If you are choosing to go the angel route, the first thing you need to do is define what type of potential investors for your startup you want. The next question is whether you need one or several.
How many investors should you have? How much can each one help? What are your goals for that investor? Are they specific, or are they general? If it is a general fund, how much time will it take to raise money?
What is the probability that someone in the community will invest in your business or startup? (A common mistake among startups which increase the time needed to raise money and lower the likelihood of raising money.)
There’s only one way to find out: put some numbers up on a wall and see who wants to invest.
One important concept that seems very easy to forget when talking about investing: people usually don’t invest unless they’re interested in getting their name associated with something. In other words, no-one invests because they think they’ll get an equity stake as part of their return.
Instead, investors look for ways to build goodwill with their communities, so that when there’s an investment opportunity, people know where they can count on them for support. This takes time and effort; however if done well in tandem with your other efforts (as part of your strategy), it pays off bigly over time.
So don’t forget about this important detail when talking about potential investors; otherwise you run the risk of losing them because nobody wants anyone else’s name associated with something stupid like letting their friends do something stupid.
Effective methods for finding potential investors
There are many different ways to find potential investors.
The general approach is to identify people you know personally who would be interested in your startup. Once you’ve identified people who are interested in your business, go back and ask them for suggestions on their favourite start-ups.
It may seem a bit weird, however it’s a great way to learn about the startup industry and build relationships with potential investors.
There are many ways to raise money. Most of them are simple and straightforward, however not all of them are appropriate for a startup or a business that has a very short time-to-exit, such as an investment round.
You need to know which kind of funding you need (and in what amount) to be able to make your product or service as good as it can be — and which one is right for your company.
Venture capital is one option, so long as you have the right ideas and structure in place. Venture capital can be used in a variety of ways: equity stakes, loans, working capital, venture tax credits (which reduce taxes on your investment when you take it out), and even government grants.
You’ll have to do some research on companies that fit the criteria you’re looking for, then find potential investors for your startup who can figure out if they like the idea behind it. However, this approach also has its challenges: if the target company doesn’t appear in their market research, then you won’t get very far with convincing them otherwise.
Crowdfunding isn’t just about raising money for your agricultural software or other startup; it’s also about finding investors who aren’t afraid to back your project because they’re looking at the long-term potential of your venture rather than just the short-term profits of their investments — as well as being comfortable with getting involved early on in its development process so that they can help shape its direction from day one.
If you think that equity crowdfunding isn’t for you however want to raise money from “crowd” instead of “investors”, non-equity crowdfunding might work for you: these funds aren’t restricted by asset size or any other “investor restrictions”, so you don’t have to worry about dilution or having any say about how the money is spent until after it’s raised.
If this sounds appealing (don’t forget there is no risk involved!), then non-equity crowdfunding can be a great way to get early feedback on your idea while still allowing investors time to invest before making any decision on whether they’ll back your idea or not (so much more detail here).
Unfortunately, this approach has its own set of limitations too; namely that there’s no guarantee that smaller investors will actually invest more than larger ones (though there are some caveats).
“Seed money” is a very specific term in the startup world; it usually refers to money from one individual, in exchange for some sort of equity (in whatever form: equity, debt, etc.).
Most startups I know have been “seeded” by one or more people. The reason why is that it is hard to get a lot of funding unless you have connections. Unless you have connections and you are good at pitching, there is almost no chance you will get funding from unknown sources.
It does not matter if you are an early-stage company or not; however, to be successful, your startup needs contacts and people who can introduce you to potential investors for your startup.
The key to finding and connecting with potential investors is passion for the product you are trying to build, a deep understanding of your company’s business and a clear vision for how things should be done.
At first glance this model might seem highly successful however there are major drawbacks that often come up when people try this method out for themselves. First off, you need big money early on; some investors may be willing however not many. Also even if you find someone who is willing to chip in
You’ve done enough research and you’re ready to present your product to the world. However, there comes a point in your product’s journey when you’ll need an audience. How do you find people willing to invest?
The difference between raising capital and finding investors is that the latter is not just about raising money. It’s also about promoting your product, and getting in front of the right people, at the right time, in the right way, with the right message (which can be different from your message), and at the right price.
Benefits of finding potential investors
If you’re in the startup scene, then you know how important money is. It is a tool that can move mountains, however it isn’t the only one. There are over 30 billion dollars invested in startups every year. If there was only one way to invest that money, then everyone would be doing it.
Since there are many ways to invest and relatively few ways to find potential investors for your startup, we decided to write an article on this topic because we feel investors should know this stuff too:
The reason why it’s important to find potential investors is simple:
If you want to raise funding from angel investors with big name investors on board, then you need a good investor network.
The good news is that investing in startups is a very logical process — just as fundraising for established companies can be. And once you have your plan and have an idea of who your best bet might be (and why), the next step would be getting an investment proposal ready and sending it off.
More money for your startup
In this age of technology, it is important to have the right money before you pitch. If you want to raise money, you need a big amount in hand so that the banks and venture capitalists can judge whether your idea is worth investing in. However, if you need a large amount of money, there are several reasons why it’s better to raise it from individuals rather than from large groups of investors.
We have gathered few pointers here:
- Don’t be obsessive about meeting people and organisations that might be willing to invest in your idea or company. You will do yourself a favour by not wasting time on companies that don’t interest you at all.
- It takes time to build relationships with potential investors, so make them valuable by offering them something useful or useful for free first (as mentioned above).
- You must constantly keep a record of all the organisations you meet as well as their contact information. This way you can find any one day that might help your company by providing information or funding.
- If you feel confident enough about your company and its prospects, create an online profile for each organisation with which you meet (so that people can contact you directly). This way, those who seem interested in your project will know instantly whether it’s worth talking to you or not without having to try hard and look for information on the web.)
- Try not to talk too much about what makes your company special; this will lose value if someone else wants something similar from yours next year or so — however still make sure others know what makes yours stand out more than others ones out there (hint: make it interesting enough for outsiders).
Validation from experts in the field
In this post, we have been discussing how to find potential investors for your startup. The term “investors” can be a bit of a mouthful – you should try to make it as easy as possible for them. We recommend using web tools such as AngelList and your local business networking groups to get your message across.
Before we go into further detail about the various investor types and their roles, here are some general recommendations:
If you have someone who is smart and experienced in the field who you can speak with about your business, do so.
Consulting firms are frequently overpriced and often fail to deliver on their promises – ask around for referrals.
Do not invest unless you are willing to invest a significant amount of time in helping others by mentoring them if they apply. (We’re not just talking about getting them started in a new market.) If they do not show interest in working with you after that first meeting, do not waste your time sorting through email addresses again!
If they seem interested and continue to contact you, then ask them how much money they want to invest or how much advice they would like from you. Do not put yourself out there when people might think that investing their limited time would be easy!
The challenges of finding potential investors
The biggest challenge in the startup world is that there are lots of people who don’t know what you do. They may have heard about you, or at least heard about your name, however they don’t know you personally. They can’t ask you a personal question.
What they can do is get you to answer an ad in their local newspaper, or fill out their online form. Or they might just read what your company has to say on Twitter.
In other words, they probably don’t care much about what you do specifically; they just want to know if it’s right for them. And the good news is that there are ways of finding out whether it will be right for them — and not only that: that means finding investors, who are often willing to throw money at companies which have a chance of succeeding (let alone doing so).
The toughest part of getting seed funding or any other kind of money for your project is the time it takes. In order to find the right investors, you need to go through a lengthy and tedious process.
This is neither easy nor cheap: there are a wide range of options, from individual investors to large corporations, and you need to go through each one in turn. So if you want to make sure that you get the best deal possible, it is definitely worthwhile to know how this all works.
May be difficult to find the right fit
In this post, we’ve talked about pitching the idea, and what you should do if you are rejected. If you’re interested in finding the right investor for your company, there is a good chance that it will be one of the following:
You’re in the “pitch for cash and equity” business
Ask yourself: “How much money do we need to get funded?” Remember, most investors don’t want to invest that much money upfront, however they also want to know that you will be able to provide them with a return on their investment within a reasonable time frame. If it takes too long (more than three months ) to find an investor who is willing to put up some of their own money, then it’s probably not worth your while.
You’re in the “pitch for equity” business
This often involves an equity round rather than cash, however still requires an engagement period of more than a year before an investment is made. This may be particularly useful if you are pitching investors who have already invested in other companies or have very deep pockets themselves.
The risk here is usually reduced as many potential investors have equity tied up in other companies, so if your pitch gets accepted, then they can easily get out from under their investments and reinvest them into your company (or even buy you out).
You’re somewhere else entirely
There are some startups which do everything from crowdfunding (where founders raise funds from people who would like to buy shares) to angel investing (where founders raise funds from non-founders) to venture capital investing (where founders raise funds from venture capitalists).
These types of fundraising can take different forms — some require little more than an email campaign on a particular platform which may not be ideal for smaller startups requiring rapid deployment of resources — and typically involve investment periods ranging between 1-6 months, however no more; and may or may not include any kind of equity participation.
Finding potential investors for your startup isn’t a straightforward process, and it can be a challenge to find the right one. It’s also not entirely necessary to do so – in fact, you might be able to skip the whole process altogether by forming a Pty Ltd company with your accountant.
A startup needs capital, and with that comes risk. What can you do if you don’t have the money to fund your growth? What if your startup doesn’t have a solid idea and needs to grow? There are many ways to answer those questions.
One approach is building a business model – knowing what combination of costs and revenue will work for your startup, what products or services you will offer, and which customers will buy them. The next step is taking out a loan or getting some capital from friends or family.
If you’re looking for potential investors for your startup, working with an established investor network or developing relationships with people who have money is one way of doing this.