8 Ways to Find Investors for your Startup
May 11th, 2021
8 Ways to Find Investors for your Startup
Find the right investor for you using online platforms, such as Angels Partners and other sophisticated verticals
Looking to secure financial leverage to fund your Startup? Using sophisticated online platforms, social media channels and effective emailing to find and engage with investors, finding the right investor for your Startup can now be achieved in more ways than one.
1. Using Tech to Find Investors
Over the past few years, online fundraising platforms have exploded. Combined with the global pandemic (Covid-19) causing significant disruption to face-to-face business, finding online investors is becoming ever more sophisticated and effective.
With a plethora of platforms to choose from, getting to grips with the services offered by each one is going to save you valuable time. For example, with its practical LinkedIn Sales Navigator tool, platforms such as LinkedIn allow you to quickly locate many business professionals online without necessarily targeting investors. Other platforms, such as SeedInvest, Start Engine, and Wefunder, have large online networks yet operate on a crowdfunding basis, where entrepreneurs are expected to have already secured 50-80% of their round to attract investment.
Angelist, a boasting platform similar to LinkedIn for Startups, can act as a company visiting card for interested investors, providing your profile is up to date. This platform focuses on being a valuable source and reassurance tool for investors, where curious investors can search for collaborations and deals and check out a Startup's profile. Alternatively, for entrepreneurs looking to find capital on a loan basis, CircleUp is the platform for you.
2. Find Investors on Social Media
A powerful, inexpensive, yet, underrated tool for finding investors online is social media channels. From gaining traction and attracting investors to examining and testing the market, these platforms can provide Startups with a means of finding investors.
Social media platforms, such as Facebook, Twitter, and LinkedIn, have evolved dramatically since their conception into powerhouses of networking databases, allowing entrepreneurs to reach out and remain connected to investors.
For individuals able to get hold of an investor’s profile handle, direct messaging could be the answer to raising capital for your startup. Otherwise, posting, collaborating, and paying for sponsored posts and influencers could gain traction. Twitter can provide value through fruitful conversations between investors and founders, but the lengthy and time-consuming process has downsides.
3. Friends and Family
After getting your business up and running with personal funds, the most common next step is talking to your friends and family. Those around you may be willing to invest money into your business as they know you and your idea. You, therefore, get to avoid the ordinarily long-winded process of securing investments, as there will be no need for initial introductions and discussions.
However, you must be careful with funding from friends and family, as once again, if your business fails, they will lose their money. Ensure they are aware of all potential risks and fully understand them.
4. Finding Investors through Blogging
Have you considered checking the blogs of active investors? One way to connect and find investors that fit your company profile is by engaging in conversation via a blog. Whether it be your professional blog, detailing the thought process through each round of fundraising and telling the up-to-date story of your company, or targeting appropriate investors’ blogs, instigating a discussion might just get you noticed, better yet, a response.
The capacity for blogging to remain a valuable tool for finding investors is apparent, but entrepreneurs should consider how to interact with potential investors. Start by reading an investor’s blog to get a feel for who they are and what type of business they tend to go for. One of the extremely popular investment columns is The Intelligent Investor by Jason Zweig.
Some investors have high visibility and are in the public eye, so use this to understand how they perform business so that you can tailor your message for a personalized approach and engage effectively. Alternatively, guest posting on popular blogs or paying for a feature blog article, although it may set you back financially, could be the golden ticket to getting you noticed.
5. Emailing Investors
A classic yet, practical tool for finding capital is effective emailing. Well-designed email templates can speed up seeking investors and help entrepreneurs raise millions.
Like any method of reaching out, being mindful and personal can help individuals form a more authentic connection with an investor. While well-designed email templates are a time-savvy and energy-saving tool, personalized emails could improve your chances of connecting with investors. Want our advice? Start by looking up an investor (you can try using platforms like Crunchbase) to understand if your interests are aligned and see what they find appealing.
Then, when writing that all-important first email, ensure you’re only giving them a teaser, no mention of signing NDAs and keep it short and sweet. Double and triple-check that you’ve presented a clean, professional piece of writing with perfect spelling and grammar, well structured, and read well.
6. Applying to Accelerators and Incubators
Startup accelerator programs have traditionally been an excellent method to help find investors, expand professional networks and receive sound advice on building a successful business.
Different accelerators operate under additional terms, so when browsing and applying, it's essential to consider their terms and conditions, check their success stories and examine their track record. In some cases, the reality of accelerator programs can fall short of expectations, with access to resources and the network's capacity being reduced.
With the emergence of Covid-19, co-working spaces and accelerators are not inapplicable at the time of writing. Still, working space models are evolving, bringing into question the efficacy of such setups and programs for the future. Alternatively, entrepreneurs could invest time into building up their network, with the view of creating an active board of advisors, who, in the term, will bring in their network, contacts, and potential investors.
Contact former colleagues, teachers, mentors, family members, and any other individuals you can trust to help guide you through the process.
An incubator is a program that helps startup owners in several ways. Incubators will provide access to the information and resources needed to get your business idea off the ground and find the seed funding you need; however, only some will give actual financing.
7. Small Business Loans and Traditional Loans
Talking to your local bank can be hugely helpful for your business. Most banks will offer several loans for businesses of all sizes that can help you continue your startup journey.
To secure this loan, you must ensure that your paperwork is perfect. Banks are even less likely than regular investors to give money to a business if they have no track record of success, so make sure to put your best foot forward.
The Small Business Administration (SBA) is a US Government Agency with a hugely helpful lender match tool for banks. This allows them to check your business while also allowing you to find pre-approved lenders.
You can, of course, also apply for regular business loans as well. These will likely have higher rates as they are less geared toward entrepreneurs; however, they can still be a great option.
8. Small Business Grants
A wide variety of state, federal, and nonprofit grants are available in the U.S., with several criteria requirements. Some are for entrepreneurs, startups, and small businesses, while others are more specific about the sector of the business or individual (women, veterans).
Grants are hugely attractive because you don't have to pay them back! However, you must be sure your documents are all in order and meet the eligibility criteria, as the number of people applying for these grants is enormous.
9. Sharing your Product to Attract Investors
Time and time again, entrepreneurs make the error of finding investors before they can showcase a product. Most investors will not be interested in funding an idea; they want to see traction, engagement, and product use on different verticals and platforms.
Suppose a Startup can demonstrate they have successfully acquired a customer base. In that case, this sparks a potential investor's interest and allows you to negotiate better terms from more appealing investors. Generate buzz, then generate the funding.
10. Hire Professional Fundraisers and Brokers
If you have been fortunate to receive part of your education and training at a business school, this route to seeking investors is likely for someone else. But, on the other hand, for founders who don’t have the skills, contacts, or know-how to talk the language of business, hiring professional fundraisers could increase your chances of raising capital.
Generally, these individuals are former founders, financially well-connected, with a vast network and reputable name, they not only act as translators between inexperienced founders and potential investors, but they also have an invested interest in choosing good projects in the hope of upholding their stats and metrics. By delegating much of the work to these fundraisers and brokers, ultimately, the control falls into their hands.
Put simply; there's little room for choice when selecting an investor - you take what you’re offered, as many will ask for an upfront payment and take a commission as equity. In addition, these one-trick ponies cater to specific rounds and stages, so founders will have to use different fundraisers for different stages of the fundraising process. A generally stressful strategy but perhaps necessary for amateur founders lacking a network and an aptitude for business.
11. Crowdfunding Platforms
Crowdfunding platforms allow you to advertise funding opportunities to the general public to pitch in. Several different crowdfunding platforms could be suited to your business.
These are platforms where you can offer those investing a reward in return for a relatively small investment. This can be anything from a free product to a discounted subscription etc. They are often tiered based on the amount the individual invested.
This is funding based on given shares of the company. Those who invest will not receive their initial investment back; however, they will receive a percentage of the funds the company makes.
In any major city in the world, there will be several startup meet-ups and groups. These are great ways to meet fellow investors and founders. These tend to be hosted by other founders but can also be directly involved with investors.
It is possible to find groups directly located in your business vertical and area, such as tech, crypto, or retail. This way, you can connect with like-minded individuals.
These groups will likely also hold official investment-focused meetups so that you can network easily with those in your community.
13. Subscribe to Angels Partners’ Startup & Investor Matchmaking Service
Fundraising in the digital era, using online platforms and technology, is an effective way to find and connect with active investors. At Angels Partners, we have streamlined the fundraising process, reducing the time it takes to raise capital by helping founders connect with the right investors for their businesses. With access to over 40,000 investors, we are leading the way in assisting startups to access capital. To ensure your business has the best chance of succeeding, take a look at our top 5 criteria for success:
- The business has to attract investors. Investors are looking to invest in companies incorporated in stable countries with solid economic, social, and political incentives. Potential interactions are only appealing with authorization to own and eventually sell shares of a company, meaning incorporation in the correct country is paramount.
- Have your financial documents in order. An actionable business plan with a realistic financial and contingency plan will impress an investor. In addition, you should show how you plan expansion and develop your business. Unfortunately, many entrepreneurs need to pay more attention to the delay, resulting in a fundamentally inaccurate business plan.
- Be efficient with time. When interacting with a potential investor for the first time, pitching your idea should be less than 5 minutes, seamless and eloquent, with a touch of mystery. Aim for just enough mysticism to create positive questions in the investor's mind and entice them to come back for more, allowing you to secure that all-important second, more extended meeting.
- Build trust and confidence with your investors. Every investor will want to know they can trust you; after all, they entrust you with (hopefully) significant sums of money. Build credibility by promptly sending emails, following through with actions, and proving that you can back up what you say with the goods. Use statistics and data to demonstrate your reliability.
- Think Big. Ultimately, the stakes are higher for investors than entrepreneurs, with their capital and reputation on the line. No investor worth their word will invest in small projects with low financial gain. Approximately 9/10 investors lose all their investments, so it’s not surprising that most are just looking for the next Uber, Facebook, and Amazon. Go Big or go home.
Finding and connecting with the right investors for your Startup is your ticket to taking your business to the next level. If you believe you meet the above criteria to start the next big thing, head to https://angelspartners.com/register to sign up today and start your fundraising journey on one of the world’s leading fundraising platforms.
Sign up to Angels Partners today and connect with 40,000+ investors
14. Venture Capitalists (VCs)
VCs are private investors who use their own money to fund companies. They will often have different requirements for their funding; some will request an executive or board role, whereas others may simply be interested in equity and shares.
VC firms (groups of VCs) work together to invest from the same fund. They tend only to be interested in companies with huge profits and growth potential.
15. Consult an Attorney
Having an established relationship with an attorney as a small business is a good idea. They can be available to advise on several aspects of the company, even securing funding.
Your attorney will have several connections, so this can come in handy when connecting you with other business owners or investors.
This could also tie in with setting up your advisory council, a group of professionals you trust to advise you for the benefit of the business.
16. Pitch Contests
There are a vast number of contests for startup owners. These will have a crucial investment as the prize and are often organised by area or vertical.
You will be directly competing against other startups in your field for funding, so it is crucial to have nailed your pitch (be sure to practice it a lot) and have all your papers/financials in order.
17. Contact Business Schools
If there are colleges nearby offering diplomas or degrees in your field, it is worth reaching out to them. The professors are likely to have many connections to investors interested in your verticals and may be able to set up an intro. Sometimes the professors are investors themselves!
18. The Better Business Bureau
The BBB is a nonprofit organization that rates startups on trustworthiness and potential. Ensure your company is listed with them, as many investors use this to find new opportunities.
Other things to note:
Practice, practice, and practice your pitch. It is essential that you can deliver your pitch confidently and excitingly to attract investors. It is equally important to practice listening; you must be prepared for all kinds of feedback, good or bad.
Bootstrapping may be an excellent way to begin depending on your financial situation. This is when you set up the company solely using your finances. This can be harder for people from a lower income background; however, it is the most common way of getting your business off the ground.
It is essential to be clear about what funding stage you are looking for. Many investors will only look at startups in certain stages, so you must be sure where you stand, whether pre-seed, seed stage, etc.
A considerable part of securing funds is confidence to turn down an offer. Do not accept an extremely inadequate offer out of desperation. Know your company's worth, and defend it.
This is where Angels Partner steps in, helping investors in their search for ambitious and likely to succeed startups.
Our selection process is rigorous and the matchmaking is affinity based to ensure each meeting is qualified and of economic interest to both parties.TRY IT OUT
AWA Success Story
How to Write Cold Emails
Executive Summary vs Pitch Deck
How to Find Local Investors