This is a guest post from Gia Keasler who writes about attracting startup investors.
Do you have a viable idea that you want to turn into a successful business? Do you manage a startup that desperately needs some cash? Although many small business owners often rely on grit and determination to make it through, it may not be enough to keep your startup afloat. How can you successfully connect and pitch to investors?
In this post, we will share six practical tips on how you can attract startup investors.
Pitch a Specific Return on Investment
Although many investors believe in your business, they still need to earn money out of their investment. It would help if you highlighted what they’d personally gain when they invest in your industry.
Whether it’s pitching to an angel investor, venture capitalists, or a rich relative, you have to convince and show them what they’ll be getting in return.
According to Michelle Dipp, the co-founder and managing partner of Biospring Partners, “It can be tempting to focus and fall in love with your business model. However, investors need to know what’s in it for them. One of the excellent ways to capture their interest is to show them what you’ll be getting in return.”
Prepare Solid Marketing Research
To help secure your investment, you need to convince investors that you’re solving an actual problem and there is a market for it.
So, before talking with investors, you should do your due diligence. Conduct market research so that you can lay down a solid foundation for your pitch. After all, you are less likely to start a new industry.
This means that there are startups within your industry that are already doing what you want to do. The question is: What makes your startup different from the rest?
The goal here is knowing who your key competitors are, the industry’s size, or anything that deems you as a key opinion leader in the industry.
Develop a Full-Proof Business Plan
Once you establish what kind of environment you want to operate in, you need to outline a business plan and the things you need to do once you’re there.
Your plan should be concrete enough to give you an idea of where your business will be heading.
Crafting a five-year plan is a great way to start ‒ usually focusing on the smallest details of the first year while becoming more general as you go. Most investors will focus on year one.
Create a Minimum Viable Product
By coming up with a product (or service) prototype, you’re showing prospective investors that you and your team can produce the right product.
Ideally, this should be something that prospective investors can test out for themselves. You should also include your marketing and sales models. That way, your potential investors can know how you can generate profit from your products or services.
Keep in mind that your product doesn’t have to be perfect. What’s important is that you have something functional to present. Moreover, your investors are likely to advise on how you can improve your prototype and marketing strategy.
Choose Relevant Business Investors
When choosing a public, or private source of financing, you should identify prospective investors and their goals.
When choosing the right investors for your startup, you need to check whether their profile matches yours. This research includes knowing how often and how much they are willing to invest in your business. Another thing to look at is whether your investors will give you free rein to run your business or want to be involved. Are they financial or strategic investors? Strategic investors often have experience in your industry, whereas financial investors are more focused on return.
Before you pitch to a potential investor, check what projects they have under their belt. Doing so can give you an idea of whether they will notice your startup or not.
Seek Out Advice From Investors
Rather than cold-calling investors and begging them to invest in your business, ask them for advice instead.
Cold calls and emails asking investors to invest in your startup come off as a desperate attempt to get their attention. Instead, it helps that you seek out advice from investors that you generally admire.
By strategically reaching out to an investor and asking them for advice, you’re building a relationship with them. As a result, they can be more willing to invest in your startup.
This approach gives them the chance to point out any possible flaws that might be present in your startup, and this also shows them that you value their advice. Asking for genuine advice will help you land a highly engaged and passionate investor in your business.
If you own a startup and try to win over potential investors, you need to prove your worth. By applying the six tips listed above, you can attract the right investors to your business and a framework for success.
Good luck.
Working on a startup idea and want to pitch investors?
I can help. You can set up a time to chat with me about your marketing challenges using my calendar. Email me jeffslater@themarketingsage.com Call me. 919 720 0995. The conversation is free, and we can explore if working together makes sense. Watch a short video about working with me.
Photo by Travis Essinger on Unsplash
