Venture capitalists and angel investors are committed to investing in some of the best startups on the planet. And soon”regular people” will be able to choose some of the greatest startups for investment purposes when they take advantage of equity-based crowdfunding.
The Jumpstart Our Business Startups Act or JOBS Act will soon make it possible for most people who are willing and able to invest in startups to invest thousands of dollars in companies of their choice.
A startup backed by passionate regular investors can help its growth via social media since they will most likely be talking about their investments in these startups. People who trust your brand are more likely to help spread your marketing messages to their friends.
The opportunities to attract investments will increase but only some of the best startups will be able to successfully secure funding from a regular investor. You should be doing something right to get the right attention and the investment you require to grow. Venture capitalists and angel investors currently invest in startups based on a rigorous process that separate the great from the good.
How then do you position your new startup for funding?
Are you solving a REAL problem?
Investors take great risk of investing in startups but the chances of cashing out successfully are minimal therefore they can’t afford to bet on a startup that may not likely pay off.
To attract the right investors, you must focus on doing something significant that could change consumer behavior, attract consumer attention in the shortest possible time or that could change business process.
Can you sell your idea in 60 seconds or less?
Most investors have little or no time to listen to countless pitches week after week. They probably receive hundreds of emails from startup founders trying to sell their ideas to them.
Don’t send another cold email that may not even be opened. If you can, get a referral that can land you to pitch your idea in less than five minutes.
According to Ron Conway (one of the best known angel investors who has invested in more than 650 startups), within 10 minutes, he can tell if he and his team are going to invest in a company. Make the first minute count with a great pitch about what problem you are solving and why you business matters to the industry.
How well do you know your business?
Face-to-face meetings give founders a rare opportunity to give the pitch of a lifetime, make it count and deliver a flawless presentation if offered the chance. In your quest to find the right investor, ask for a face-to-face meeting that will allow you to demonstrate what you have done and you intend to do with the money you are requesting.
Investors have instincts for numbers. Expect questions like: How big is the market? When do you intend to break even? Who is your biggest competitor and much percentage do they have of the market? How quickly are you growing?
What progress have you made so far? Be prepared to share the number of customers you have signed or downloads you have recorded, sales figures, pre-orders and recorded traffic.
If you have not launched yet, you could validate your idea and get the number of people who are prepared to use your product. You can create a launch page and request for emails from prospective consumers. That could be evidence of user interest.
Get every information you can about you industry, its trends and growth rate and how you intend to take advantage of the trends. A well-researched executive plan can help your case for investment. You should be able to convince your potential investors on why you team is well positioned to pull of off and success in the industry.
Prepare you business for investment by focusing on what matters to the consumer and how you intend to serve your market with your product. Investors know what they want, it’s your job to convince them that you are worth their investment.