Entrepreneurs know firsthand the hard work, innovation and expense that it takes to launch a startup. Entrepreneurs also know that no matter how much legwork goes into forming a startup, sometimes it takes additional funding to get it off the ground.
Investors can be the key to taking your startup to the next level. Finding them, though, is another matter. If you are the owner of a startup who is interested in attracting the right investors, you may want to consider some of these tips.
Investors want to see startups that are managed wisely, and having a sound budget is the first place to start. Create a realistic budget for your small business and stick with it. Managing your cash wisely can be a great tool for leverage when it comes to acquiring capital—and attracting investors.
2. Consider crowdfunding
In the past few years, crowdfunding has become increasingly popular for startups and investors. For the uninitiated, crowdfunding is a way for people all over the world to contribute small (or large) amounts of money to a project that interests them. Why stick with the traditional model of investing when you could harvest this innovative new one? Consider platforms like Kickstarter, GoFundMe, and IndieGoGo to find “investors” for your business.
3. Present the facts
Before you pitch investors, you should undertake an in-depth analysis of your company’s metrics. Track the money spent and invested in your business, revenue potential, the cost of acquiring and serving customers and other important figures. Investors will want to see cold, hard facts about our startup. When you are prepared to make your pitch, have these figures ready to present.
4. Be realistic
You must invest a lot of resources into your startup, but if you tip the balance by spending too much on overhead, you could be in trouble. If investors fear that you are acquiring more debt than you can repay, they will run from your startup, fast.
Additionally, don’t overstate your company’s moneymaking capabilities just yet. Reasonable investors will know that your fledgling company is not yet a revenue powerhouse: There is no need to make a promise you can’t keep by overstating potential profits.