You’ve got your million dollar idea and you’ve got a good team of people working on it with you. Now all you need is the money. Securing investment for a new business is very difficult, but not impossible.
This is the typical scenario for most new startups: You have no track record, no customers. No proof at all yet that your brilliant idea will work, can work or will stand the test of time. You do not get past negotiation for funds because you do not have solid historical and operational performance. This list of reasons you are still not funded is endless.
There are less traditional ways of securing investment these days, including crowdfunding, but they might not always be best. The traditional pitch to an investor is your best bet for funding your new business. Here are some things you should be thinking about when you are trying to win over investors.
Get real customers
The greatest challenge for many startups is getting real customers. It’s a make or break at this time. Try everything humanly possible to get noticed-Facebook, Twitter, events, email, blogging, contact bloggers, whitepapers, slides, free courses, webinars, press releases, guest posting etc. You are better off with real customers when approaching investors for funding.
Professionalism is key. An investor is not going to want to work with somebody that they don’t think is serious about their business. If you can’t prove that you are a professional at this stage, then they are likely to see you as a liability, which will put them off working with you.
There are a few simple things you can do to make yourself look professional. Dress well when you go to the pitch, and be confident. You also need to make sure that you are properly prepared. Don’t underestimate the power of being over-prepared.
Make sure you cover every base so that you don’t get caught out by tricky questions that they may ask you. It is also a good idea to invest a bit of money in your company’s branding. Your website should be very professional.
Connect with relevant people in your network
Make use of contacts that you may have in the industry. A personal recommendation from somebody can help you get a foot in the door with investors who might not have met you otherwise. There is a lot of competition out there and these investors need a reason to choose you over other potential partners.
Don’t rely too much on crowdfunding
There are a lot of stories out there about businesses that have smashed their fundraising targets in a matter of hours and collected huge amounts of investment from crowdfunding sources. Unfortunately, these stories are exceptions.
It is perfectly viable to get some funding for your new business by crowdfunding, but you need to be aware that most businesses will not be able to get enough to fund themselves solely by crowdfunding.
By all means, put your project on there and see what you can get, but don’t rely on it completely, and make sure you are looking for funding elsewhere as well.
Look into grants
While it is unlikely that you will be able to fund your entire business in this way, you can still get a helping hand for free. Lots of government authorities will offer a grant, usually in the form of one lump sum, that you can put towards your setting up costs. The benefit of doing this is that you won’t have to pay it back in the same way that you will with standard investors.