How to Find Investors
Without capital, a business will struggle to quickly get off the ground. Whether it comes in the form of debt, equity, or revenue, capital is a necessity for building a business.
6 Effective Ways to Connect With Investors
One of the first questions on a startup owner’s mind is how to find investors. Angel investors, grants, venture capital: all of it goes towards making sure that your business can grow and thrive. Finding funding is one of the most pressing concerns for a startup, especially a new company. And it can be difficult to know where to start.
How to find investors to start a business will vary depending on the type of business you have, as well as the type of funding you’re looking to procure. You may need to change your strategies depending on your industry, the size of your business, and your business model. There are certain types of funding that are more useful depending on the type of business.
Yet regardless of the type of business you have, there are specific things that your business will need to do to ready itself to procure investors. To find investors, you’ll need to have a clear and concise business plan, in addition to current financials. Your financial statements will need to be accurate and timely, as you have to show that your company is stable.
Related Resource: 6 Helpful Networking Tips for Connecting With Investors
Related Resource: How to Find Venture Capital to Fund Your Startup: 5 Methods
Learn more about finding the right investors for your business below:
1) Use a Powerful Online Platform
When searching for investors the best place to start is with the resources that are immediately available to you. Thankfully for startup founders, there is countless platforms, lists, and databases full of active startup investors. At Visible, we offer a free investor database, Visible Connect, with the data and information founders need to build out their fundraising pipeline. Give it a try here.
Related Resource: How To Find Private Investors For Startups
2) Get Your Startup at a Networking Event
After you’ve done some preliminary research, it is time to hit the ground running and get in front of the investors that you believe are the best fit for your business. One of the most common ways to find investors is by attending a networking event. Startup networking events have become very common and can be found in most major cities.
3) Reach Out to Friends and Family Members
If you’ve determined that venture capital or particular investors might not be best for your business you can turn to friends and family (or angel investors). Approaching friends and family can be a delicate situation and needs to be treated thoughtfully. Learn more about raising capital from friends and family in our guide below:
Related Resource: 7 Tips for Raising a Friends & Family Round
4) Network Online Using Social Media
Startup investors are notorious for their use of Twitter and other social media platforms. Social media, especially Twitter, can be a powerful tool for a founder looking to find an introduction to an investor. If you find an investor you have on your target list is a frequent Twitter user, don’t be afraid to Tweet at them or reach out via direct message.
5) Utilize a Crowdfunding Platform
As the startup space continues to grow so do the funding options available to startup funders. Over the past decade, crowdfunding has taken the funding world by storm. While it is not for every business, crowdfunding can be a valuable tool. Learn more about raising crowdfunding below:
6) Apply for an Incubator Program
As put by the team at Investopedia, “An incubator firm is an organization engaged in the business of fostering early-stage companies through the different developmental phases until the companies have sufficient financial, human, and physical resources to function on their own.”
Incubators can be a valuable tool for startups looking to work through the early phases of building their business and model. Oftentimes, this comes with a built-in network of startup investors and opportunities to pitch them for future investment.
How to Find Angel Investors
How do you find angel investors? They may be closer than you think. Angel investors are usually your very first investors, and many of them come from your family and friends. An angel investor is simply an individual who has money to invest: they invest it directly through you. Often, angel investors are available even when you can’t get venture capital or a traditional bank loan.
Angel investors have numerous advantages. They are less likely to have strict requirements. They are more likely to loan you affordable money — either at low interest rates, or for a small share in your business. While traditional investors often require that you have a proven business model and financial statements to match, angel investors simply need to believe in your business.
When courting investors from family and friends, you’re working with those who already know you best. These are individuals who know that you’re trustworthy, that you are confident and capable, and that you have a solid business idea on your hands. Rather than having to prove yourself through business proposals and raw numbers, you can instead bank on their familiarity with yourself as an entrepreneur.
If there are no prospective investors in your immediate family or friend group, you can begin networking with those you know. By letting the people you’re close to know that you’re in need of funding, you may be able to connect with a friend-of-a-friend or a more distant family member. This is an opportunity not only for you but for them. If you truly believe in your business, then you know that you’ll be able to pay the money back and more.
And an angel investor doesn’t necessarily need to be someone you know. There are networks of angel investors online who are specifically looking for opportunities, though they may be more difficult to court than someone you have a prior existing relationship with. An angel investors network will connect you to a broad spectrum of investors, often who specialize in different types of business.
If you cannot find angel investors, you may need to instead turn to venture capital or a bank. But this is going to take a lot more work. You may need to fund your business yourself until you can prove that it has revenue-generating potential, or you may need to grow slowly as you prove yourself capable of dealing with conventional credit lines and debt.
Angel investors are by far the easiest way to aggressively grow your business, and they should be courted whenever possible. But because it relies upon knowing someone who has the cash to invest — or at least finding someone through someone you know — it can be a challenge.
Related Resource: How To Write the Perfect Investor Update (Tips and Templates)
How to Find Small Business Grants
If you’re unable to find an angel investor, a small business grant may be a better solution. Small business grants are grants awarded to small business owners in specific locations, industries, or of particular demographics. These grants are intended to encourage the health of small businesses: a successful small business is often foundational to a local economy’s strength.
Most small business grants have fairly specific restrictions. There are grants for rural businesses, technology-focused businesses, and innovative businesses. A business must often write a grant proposal which outlines why the business needs the grant, why they are worthy of the grant, and what they will do with the grant money. This is very much like a proposal for a loan.
However, as long as the small business meets the terms of the grants, it doesn’t need to pay the grant money back: the grant money is gifted to the business to help it grow. Grant proposal writing is a fairly niche specialization, so many businesses (especially startups) may want to hire a grant writer to complete their proposal. There’s no limit to the number of grants a business can apply for; small business owners may want to apply for as many as they feel qualified for.
Connect With More Investors With Visible
Connecting with the right investors is crucial to funding success. In order to better help with your fundraise, we’ve got you covered.
Related Resource: A Step-By-Step Guide for Building Your Investor Pipeline
Find the right investors for your business with our investor database, Visible Connect. Add them directly to your fundraising pipelines in Visible, share your pitch deck, and send investor Updates along the way. Give Visible a free try for 14 days here.