Do you have a million-dollar idea but are short about a million dollars? Welcome to one of the most difficult stages of starting a new business: funding. It is one thing to believe in your new business, but it is another thing to be able to convince others with capital to invest to do the same.
Investing in a business is a risky proposition even to those with the extra money to throw around. You’ve likely seen Shark Tank, even the uber-wealthy sharks remain frugal when being pitched on a business. So how can you convince VCs, angel investors, bankers, or even friends and family to help you get things off the ground?
The best way to convince others that you are worthy of their hard-earned cash is to prepare yourself for what is sure to be an onslaught of questions. Lucky for you, we have spoken to business leaders that are excited to help you and your company get the funding you deserve.
“When you first start out, it can be daunting to think about the funds you need and how you're going to get them. But an easy way to start is to soft-sell through networking. Networking is a surefire way to get your business out there and let other professionals in your field know about your brand. Networking events are great opportunities to meet other people in your industry, learn tips and introduce your brand to the right people. The right soft-sell pitch can lead you to a deal with investors you otherwise wouldn't have had.” - Stephanie Wells, Formidable Forms
“Networking allows you to pitch your business plan in a less formal manner. Having a conversation and allowing your business to come up naturally can be a great way to enter into deeper conversations about funding. It might seem awkward, but doing it right and forming a relationship with the investor will make them more likely to front you with some capital. Plus, they will be more likely to stick their neck on the line for you to other investors if they already have developed a relationship with you.” – Loic Claveau, CMO at TakeUs
“If you’ve been building a great business, getting out and networking within the local startup and investing community can be a great way to meet investors. Most of my meetings with investors developed by being out at an event and mentioning my business. If they seem interested in your business, they will keep the conversation going. Letting things happen organically can yield great results.” - Diana Goodwin of AquaMobile Swim School
“If you have business results at the start then it will be easier for the investors you are interested in to see the benefits of giving you their money. Approaching an investor without having any sales or products will make it almost impossible for you to get them interested. If your idea is less tangible, say a software-as-a-service (SaaS) product, find a way to build it out using your own capital first. And don’t forget that YOU are the face and voice of your company at this stage. You are the builder and you are the salesperson. You are selling a product but also an idea, a passion. Communicating all of this to investors will make a world of difference.” – Brittany Harrer-Dolin, Co-Founder at Pocketbook Agency
“It feels like a catch-22 at times. You need money to get customers but customers to get money. You need to have a plan to get that first customer without depending on a massive investment from outside investors. It will be much easier to secure that first backer if you have shown them, they are investing in something that people want, especially if you are a first-time entrepreneur. And it makes sense. You probably wouldn’t throw your hard-earned cash at something that hasn’t been proven.” – Michael Van, CEO at Furnishr
“A business plan is crucial when attempting to secure capital. Its main purpose should be convincing investors that your business and product are worth the risk. It should outline your goals and objectives and show that you have expertise in what you are pushing. This also applies to your marketing plan, which should be included in this. What is the price point? What is the market currently like? What will their investment get them? What are the barriers to entry? Have answers to them all.” Anamika Goyal, Head of Architecture & Design at Cottage
“Make your business plan digestible to the reader. If it is not in an engaging format, investors are going to put it down before even considering it. They are likely going through hundreds of these, so you need to give them a reason to stay invested in it. Pun intended. Make it persuasive. Make it count. Don’t get super caught up on the tech-heavy slides. You are selling yourself and the company. If you are not super artistic, this would be a good time to hire someone who is.” – Brandon Lurie, Marketing Director at Y Meadows
“A stock that pays dividends can go a long way toward convincing investors. It is all about making your pitch more desirable. Offer long-term equity, of course, but use the stocks to sweeten the pot. Focus on creating sample reports and be specific about the amounts invested and the projected dividends they can expect to see. Investors are interested in seeing investments that are foal-proof. They want short and long-term results.” – Stephen Skeel, Co-Founder and Executive Producer at 7 Wonders
“Demonstrate that people like and engage with your product. User reviews are one of your biggest assets when trying to attract investors. Include quotes, how long customers have been with your company, what they spend on average, and how often they have upgraded or spread the word to others. Keep track of all this from the start so you can present it to the investors. Investors like seeing and understanding that your product offers a value to your customers, even if it doesn’t make sense to them, at least they can see that it is providing a service to people.” – Max Schwartzapfel, CMO at Fighting for You
“In-person networking is paramount, but don’t undervalue the importance of fundraising online. Don’t let your ability to generate interest be limited to where you live and who you can talk to face-to-face. There are many websites out there that have popularized the idea raising money in places outside of Silicon Valley. Post on one of these sites and let your metrics do the work. That is the best way to stand out on these types of platforms.” – Chris Bridges, CEO at VITAL
When it comes to securing the precious capital your business needs to enter the next stage of its evolution, you need to make sure that it is clear that your project solves a real-world problem that people are facing.
Think outside of the box and create a product that has real value in solving a problem that no one has tried to yet. It can be as big or small as it needs to be, as long as it provides value to people seeking a solution. Fortune favors the bold, so be bold and watch as your fortune comes in the form of eager investors.
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