With thousands of startups launching every day, becoming an
entrepreneur may seem like a lucrative career choice. However, it is important
to note that it takes much more than a great business idea to start a
successful company. An enormous amount of hard work, passion, and dedication go
into creating a sustainable business. Having access to proper funding is also a
critical aspect of success.
The business industry is so competitive that it is impossible to
get a company off the ground without the backing of the right investors. It is
not enough to just pitch your idea and accept funding from the first person who
offers it. Following the three steps below can help you secure the funding you
need to build your business.
Identify Which Type of Investor You Need
The type of investor you
need varies depending upon which stage your business is in. Seed money is
vastly different from growth funding, so you need an investor who is willing to
provide funds for the current stage of your company. You can find investors for
any of the following stages.
·
Seed stage: Your
business is still mostly an idea. The money you receive from seed investors
with be used to build and market prototypes. The money is intended to get the
company off the ground so it can offer a substantial return for investors.
·
Venture capitalist stage: Your
company has proven to have a successful concept through sales but needs
additional funding to grow. A venture capitalist typically has numerous
connections to help you market your product or services. The money you receive
can be used to advertise the company and increase sales.
·
Growth stage: Your
business has proven itself to be wildly successful and many people want to
profit from it. The company’s profits are stable enough to sustain it but
investors make it possible for the business to grow and expand.
Many investors specialize in one stage so it is important to
know the current needs of your business. This allows you to find investors with
experience and knowledge of the current stage so they can offer your company
their expertise as well as their money. Whether you choose to secure the
funding you need from a bank, angel investor, or personal investor, you have to
know why you need the money and how you will use it to grow the company. This
will help you develop a good business pitch.
Do Your Research On Potential Investors
Once you know which type of investor you need to work with, you
should start researching the candidates. Different investors offer various
types of experience and connections so it is crucial to choose someone who
specializes in your industry. If your company is in the tech industry, you need
someone who is interested in funding new technological solutions. If your
company offers an innovative product that makes life more convenient for
consumers, you need a financial backer who believes in the product.
For example, Chris Sacca is a legendary
Silicon Valley investor who has provided early financial backing for companies
such as Uber and Twitter. He has also made substantial investments in the
technology industry with the cloud hosting software company Twilio. His
company, Lowercase Capital, is responsible for backing numerous startups with
the tech, social media, and rideshare industries. This makes him a wonderful
candidate for other companies within the same industries. Sacca’s previous
experience has provided him with numerous business connections that are
beneficial to startups.
Entice a Lead Investor
Once you have determined which investors will be most beneficial
for your business, you can start making your business pitch to see if any of
the candidates are interested. Many investors will pass, especially if your
company is still in the seed stage. However, once you have a lead investor,
someone willing to provide you with at least 15% of the funding you need, other
investors will likely jump on board.
For this reason, it is important to secure a lead investor
first. Targeting high-profile individuals such as Sacca is the best way to do
this. Because these investors have so much business experience, you will have
to impress them with an excellent pitch that pinpoints why each investor is the
right financial backer for the company. If your pitch is solid and your
business plan is well thought out, the lead investor you are pursuing will
hopefully agree to provide the funding you need.
Securing the investors
you need to launch a business may seem like a daunting challenge, but it is the
best way to set your company up for success. Do the proper research to identify
your company’s investment needs. This allows you to target individuals who are
interested in your industry and have the expertise and connections to help you
grow your business. After securing a lead investor, it is likely that you will
gain all of the financial connections your company needs to thrive.
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