Having an investor, especially in the early stages of a business, can be remarkably advantageous.
Firstly, the investor will likely fund your ventures, so you don’t have to worry about most of your financial issues.
Secondly, an investor can be a valuable business partner, offering useful advice, guidance and insights. Some investors help companies realize and utilize more business opportunities.
Many businesses attract investors with the sole goal of funding their enterprises. According to Business Insider, 82% of small businesses fail as a result of cash flow problems. Consistent funding from an investor might keep your business from being part of this shocking statistics but the truth is, you’ll probably end up with more than just a source of funds once you partner with a committed investor. Here are a few tips on how to attract investors to get the funding you need.
1. Show Commitment & Passion
If you’re trying to get people interested in your brand, you should show them you’re fully committed to the business. You need to show a high level of interest and enthusiasm in what you’re doing to get people excited about your idea.
First off, learn everything there is to know about your business and the industry as a whole. In-depth knowledge of your niche often indicates authority and interest in the venture. This can turn out well if your business is built around a concept or idea that you are particularly passionate about. Remember that in business, passion and enthusiasm are key and can in fact, be contagious.
2. Be Flexible
Some investors may demand things like loyalty and shares from your company in exchange for their funding and contribution. So, you need to be flexible enough to accommodate such demands in your offering. Don’t set your mind rigidly on a particular investor-reward system; you may have to give up more than you were expecting. Stay open to new ideas and accept that you may have to make some sacrifices to bag worthwhile investors. Keep in mind that you don’t necessarily have to settle for an arrangement you don’t like; try different investors before settling for an unfavourable deal.
Attracting and choosing an investor is a critical stage for any company that decides to go down this path. It’s essential to learn why you need an investor and the kind of investor your business needs to figure out how to attract the right ones.
3. Don’t Cover Up Past Failures
Many entrepreneurs make the mistake of hiding their past business failures. What these entrepreneurs don’t realize is that failure is part of business, and does not always point to incompetence. Business failures are often an opportunity to learn from mistakes and gain valuable experience.
Many investors consider both failure and success as experience. Failing to disclose your past misses can exclude a big part of your business history. Plus, investors might lose trust in you should they find out that you held back vital information from them. While embracing your failures is one step in the right direction, you must also be able to show what you learned and how you hope to prevent such misfortune in the future.
4. Avoid following the crowd
To attract the attention of an investor, make sure your product solves a real problem. Too many entrepreneurs simply try to reinvent the wheel, so avoid being one of them.
“Build something first, whatever business you’re in, Do it as scrappy as you can, and get users and revenue. There are many ways to do it, as time goes on, you think more outside the box.”
“As the old proverb goes: Fortune favors the bold,” try to “do something wonderful.”
5. Share clients feedbacks and metrics
Demonstrating that people like and are using your product is going to be one of your biggest assets when it comes to attracting investors.
“Your clients’ reviews are your best weapon going into a pitch,” says Nanxi Liu of Enplug.
Not only does keeping track of and sharing this information prove that people are interested in your product or service, it also demonstrates your commitment to the growth of your startup. “The spreadsheet shows you care about results,”
6. Ask for advice
Instead of cold calling investors begging them to invest in your business, consider asking to pick their brain first. “Cold calls or emails asking investors to consider your startup generally come off desperate. Instead, Seek out advice from investors that you admire.”
By strategically reaching out to an investor for advice first, you may be able to build a relationship with them that will result in a greater willingness to invest in your business later on. It gives them a chance to point out potential flaws in your business and shows that you value their input. In my experience, asking for genuine advice can often lead to an engaged, passionate investor.
Taking the aforementioned steps can significantly increase the odds that investors will find your business worth investing in. While there are no guarantees they will decide to support you, adopting the tactics outlined above are sure to put you ahead in the competition.
Got any questions about these tips or any tips to add? Let us know in the comments below.