Startups are more than just the dream of becoming independent. It’s continuous hours of hard work, and if you are in a startup, your work doesn’t end at your job role. You have to go beyond that to make that business a success. Survey says that around 94% of all startups fail in their first year, and the primary reason for that is the unavailability of capital.
While startups are initiated with a set amount of capital, it takes a good amount of time before you can experience a steady cash flow and enjoy the profits. But the need for capital increases with the operation of the business. So the problem at hand is that one needs the right amount of capital for the business’ survival during its initial years, but the accessibility to money is limited. Therefore, the most obvious solution is angel investors. We have determined that we need angel investors to invest in startups, but the question is, how?
Let’s discuss first things first. Who is an angel investor? Angel investors are professionals from various walks of life who back the business of young entrepreneurs by investing money in return for shares and minimum stakes in the company.
Before approaching angel investors, an entrepreneur needs to understand that investors are willing to spend their money only in those business ventures that have their aim fixed and multiply the investor’s investment within a given period.
Now let’s address the elephant in the room.
How to get investors for a startup?
Startups today have more ways to get noticed and connected to angel investors or venture capital firms. So if you still have not got the funding you were waiting for, or if you haven’t begun your initial steps to attract the attention of prospective investors, we have prepared a list of your immediate to-dos.
Sign up for the Angel list
Angel list has become a vital hub for startup talents in the past few years. So if you want to find an investor for your company, you need to sign up for the angel list. Here’s how you can do it.
Have an impressive company name and a marketing strategy. Investors will not bother going through the details of your company if the introduction isn’t appealing enough. So work on your website – polish its content and appearance. Additionally, work on your production schedules and your financial statements. Nothing impresses investors more than good numbers. Browse for startups that have already received fundings previously and are featured on the Angel list. Look up their websites and presentations. Take tips on how you can improve and work on them.
Prepare a strategic list
Before approaching investors, you have to do some tasks to identify which investor might be suitable for your company. To do that, first, make a list of companies similar to yours and then check which angel investor had initially invested in them. This is called a strategic list, and it will narrow down the list to potential investors for your company. This will save your time and boost your confidence because you will begin with the most likely candidates.
Social media platforms are a blessing in disguise. You can use platforms like LinkedIn to connect with suitable investors while getting a complete picture of their previous ventures. Connecting with investors is not always about finding the investor. At times it is about making your company’s presence felt by the public in general through informative posts. The more likes and comments your posts get, the more people it reaches. That way, your investor might approach you before you reach out to them.
Prepare a killing intro/elevator pitch
Remember, investors have heard pitches similar to yours several times in their previous experiences of investment. So what they are looking for is your passion and desire towards the business. What is unique about your company? What has your journey been like? If you narrate a page out of a business book, you have perhaps deliberately given away the opportunity of getting capital for your company. Make sure you stand out through your ideas and your efforts.
Help investors first
While preparing or approaching the idea of angel investment, entrepreneurs often forget that they are also helping the investor by making them some money. The act of getting an investor to invest in your company can make you feel that it is an act of asking and begging. You have to remind yourself that it is not, that your company is valuable. The investor is as lucky to have you as you are to have them. You have to exude confidence when you are speaking about your company to prospective investors. If you are confident about your company, you can win the investor’s confidence as well.
Keep things honest
If you think you can lure the investor with a lie to invest in your company, you couldn’t be more wrong. They were in business long before you were so that they can see through such professional lies. So there is no point in portraying a false image of your company and regret the outcome later because investors will be entitled to a stake in your company. It means they will be looking through the financials, so there is no point in processing them. The whole concept of investment is based on trust. If you are honest with your company’s journey and sincere about weighing the pros and the cons on the same scale, it will reach out to the investor. Every company has potential downsides and flaws, and the investor knows it better than you. So if you paint an accurate picture of the company, they will recognize it. It will result in them having faith in you and pulling up your startup into something big through their capital.
Where to look for startup investors
Social media is an entrepreneurs’ best friend when attracting investors, testing the market, and getting discovered. One can gain traction most cost-effectively through social media. You can take both an active and inbound approach to promote your company. For an inbound strategy, you can post the updates of your company through your posts. And if you want to make a more active approach, you can collaborate with influencers and leverage with sponsored posts. If you can approach potential investors through a direct message, you are just a great message away from the capital requirement for your company. So if you think this approach fits your company, try using LinkedIn for cold messages to potential investors. Facebook and Instagram might be suitable to establish meaningful connections after you have met the investor. Twitter is the right platform to engage in thoughtful conversations with the investor based on the information shared by the investor.
Emails with an exciting yet direct subject is a proven method to grab the attention of notable Venture Capitalists and angel investors.
Online Fundraising Platforms
Online fundraising platforms have gained quite a popularity in the past few years. Virtual online fundraising platforms have become immensely popular with credible individual investors, angel investors, and funds and banks looking for new modes to invest their capital. These virtual platforms are run by peer-to-peer lending sites that provide loans to these donation-based equities, debt, and crowdfunding portals. The primary motive behind participating in these online fundraising platforms is to get noticed and find the right match for your startup requirements while being realistic at the same time. The most popular equity crowdfunding platforms are:
- Circle Up
The main intention behind attending such networking events is to create a startup support platform where entrepreneurs get to know the right investors who are perfect for their business. If the startup is at an early stage, one should try finding out which investors are investing in the event and plan a meeting to fasten the process and make things productive. These events can be helpful to meet active investors, organize networking functions, industry trade shows, and engage in coding marathons. So of the best summits for upcoming enthusiasts are:
- TechCrunch Disrupt
Begin sharing your product
The idea behind the fundraising of a startup needs to be strategic. But most investors today prefer presenting their products or services before angel investors instead of getting them in the hands of potential customers and influencers. If your product or service is helpful enough, it will automatically create a demand in the market. More demand means more purchases, more purchases mean more reviews, and more reviews mean more reach. If your company does well even before reaching the investor, you will get more benefits from the investment deal.
Accelerators or Incubators
Businesses that can make significant promises in the pre-seed stage can apply to accelerators or startup incubators to receive many benefits. In most cases, if your startup is invited to participate in such online startup incubator events, you can expect business mentorship, a state-of-the-art work environment, and strong industry connections. If your business idea is very promising, you can also receive seed funding. Being selected in a startup accelerator or incubator is quite tricky because there is quite a competition. If you get chosen, getting financing is not guaranteed because most of these programs help the entrepreneurs grow their business by providing mentorship, networking, and resources other than money.
Successful businesses are easy to find. But if you look behind the success, you will find stories of failures and improvement. You will find stories of determination and struggles to find early-stage startup investors. They have all had to go through grey days, sleepless nights to be a popular reference today.
Need investors? We can help you!
Avalgon is the world’s first all-digital startup incubator. Our 12-month program is designed to maximize your opportunities of achieving a $1 billion valuation while minimizing the time needed to get there.
Unlike traditional startup incubators, the digital essence of Avalgon makes it open for every startup out there. Whether your startup is based in Hong Kong, Zurich, or the United States, you can apply for our program today. With Avalgon, your startup will receive all-round support from global experts:
- Application review
- Incorporation, legal & regulatory support
- Technical development
- Creation & launch of a Security Token Offering (STO)
- PR & digital marketing support