How to Attract the Right Investors for Your Business

Every successful company started out as a small enterprise. Some of these companies grew through their own efforts, in favourable economic conditions. For the rest of them, the number one growth factor in their incipient phase was capital raising from investors.

Investors are successful entrepreneurs who have an eye for potentially successful start-ups and finance them, either by becoming shareholders or business partners. Some of these investors will, later on, buy out the founders, but many will continue to nurture and support the business and enjoy the financial and professional benefits of their initial investment.

But how and where can a young entrepreneur find investors willing to risk their money on a start-up which has not proven itself yet? The secret lies in finding the right kind of investors, using all the networking channels you have: your own professional and personal acquaintances, business events and conventions, and social media. In this article, we will focus on how to approach these investors (and whom to approach) so that the business relationship you establish goes beyond a simple capital injection.

1. Start By Seeking Strategic Investors

When you start looking for investors, understand that, as a start-up, you need more than just an influx of cash. You need mentoring, you need someone’s experience and you need to have doors open before you through the right introduction from the right person. A strategic investor is a person who brings more than their money to the table; they also bring their experience as an entrepreneur, their network of business partners and acquaintances, the drive to push your company to the next level and the inspiration which you need to emulate in order to become successful.

2. Tell Your Story

Investors receive hundreds if not thousands of financing requests every day. Most of them will not even get read. Others will be dismissed after the first paragraph. An investor looks for a business idea which has a high potential to succeed, backed by true passion and dedication. If you cannot show passion for your business idea and cannot tell your story in a compelling manner, your letter of introduction will never be read beyond that first paragraph. Remember that, when you request funding, you are selling yourself and your idea – so be a keen marketer.

3. But Don’t Forget about the Hard Data

Good stories attract attention, but a solid and realistic business plan really seals the deal. Investors want to see that, beyond being passionate, you are also realistic and know how the financial wheels work in your business idea. You need to have your financial projections clearly stated in the business plan, as well as solid arguments to support your assumptions.

4. Find Experienced Investors

Capital raising is a time-consuming and distracting activity. As a start-up owner, you need to focus on your business every day without interruption. Thus, it makes sense to seek investors who have already ventured into the field of supporting start-ups. The professional social media, LinkedIn, is a great place to start networking and finding these investors. You can use the search option to identify “business incubators” or “angel investors” – these keywords will take you to the profiles of people who have the experience and willingness to help potentially successful start-ups.

Be smart in making your connections; always determine if the person you want to connect with is a decision maker and has a relevant experience in investing. This person will know how to guide you through medium to long-term business decisions and, by looking at your business from the outside, will be able to identify its weak and strong points, as well as growth opportunities you were not aware of.

5. Include Your Team in the Package

The key asset an investor is looking for is human resources. A business will never grow and become successful without a team of talented and dedicated people. Therefore, when you start preparing your pitch; make sure to include your top talents in it as one of the top strong points of your business idea.

These considerations should help you create a profile of the ideal investor for your business. This investor profile is very helpful both in preparing your introductory letter and identifying the right people to approach.