Investors serve as the lifeboats of every business because they play a necessary part in the funding process. Without an investor, your business can go bankrupt, which may force you to shut it down. Also, since their main objective is to get substantial returns on investment, they'll always try to create goodwill for your business for your mutual benefit.
Therefore, as a growing business owner, you'll want to capitalize on the many opportunities investors can bring to your small business. This paves not only the way for the financial security but also a rewarding long-term venture.
That said, here are eight ways to find investors for your small business.
How to Find Investors for a Small Business
1. Ask family or friends
Your trusted family members or friends can be your small business's most reliable and readily accessible funding source. This is an ideal option because it doesn't involve a rigorous process. Most of these people are your inner circle and are easier to convince since you're already past the introduction and bonding stage.
In addition, you can trust a relative or your friend to hold up their end of the deal much more than you could a stranger. However, you should note that doing business with family or friends can come with risks such as overinvolvement or lack of tolerance.
Therefore, set yourself up for success by drafting a legally binding contractual agreement with clear-cut boundaries that draw the line between business and personal matters.
2. Attend industry/corporate events
In the business world, attending business conferences, fundraisers and summits can come with perks. These events usually attract hundreds of investors and prosperous business owners whom you can directly engage with and lay the foundation for future relationships.
Aside from that, business conferences usually have a pitch event as part of the schedule. You can maximize this opportunity by presenting your idea and hopefully gaining investor interest.
In essence, it's your chance to prove to investors that you know your business inside out and that it's worth investing in.
To give a pitch that stands out to investors, you should:
- Keep your presentation simple
- Tell your story (i.e. your business accomplishments)
- Talk about your business idea
- Discuss and demonstrate your product or service
- Exhibit professionalism and enthusiasm till the end
- Convey your target audience
- Support your claims with evidence
- Efficiently respond to questions
3. Leverage social media networks
In today's world, having an online business presence has proven to be worthwhile, especially for small businesses looking for unlimited growth potential. These platforms increase brand visibility and let investors notice you, listen to you, and gain impactful insights about your business. Some common professional networks include LinkedIn, Twitter, Facebook, Instagram, Quora, and blogs.
Here are some tips for drawing positive attention and winning over investors through your social media platforms:
- Set up a full profile picture with descriptions and bios, including your company's vision
- Follow the right industry players, including VC firms or investors you know of
- Regularly share updates about your products or services
- Invest in guest postings to attract new followers
- Join business groups and contribute to various topics. You can bond over the benefits and challenges of starting your own business
- Respond to questions professionally
Before taking the next big step, it's important to establish credentials, learn more about the investor, and interact with their content to get the full picture. It would even be ideal to arrange a face-to-face meeting to form a healthy base for a starting relationship.
4. Talk to local business owners
You're likely aware of those businesses around you and those in a similar line of work. These local business owners can be a wealth of information when it comes to finding investors.
Like you, they most likely required capital funding in the past, so they can recommend or even introduce you to individuals or organizations who helped them out.
Therefore, you should consider cultivating better relations with them and figure out how to turn it into a full-fledged opportunity. Ask if they know of good investors and whether they can introduce you or arrange for a meeting with them. Also, consider pitching your idea to them first if you think there's a chance they might be willing to invest in your business.
5. Reach out to research-focused universities
Most business institutions today run startup incubators that are designed to assist young entrepreneurs in preparing for growth and solving many business problems. These programs usually help with getting the funding to jumpstart your business as well as provide business mentoring.
For some, direct funding may not be a guarantee. However, you can expect a state-of-the-art business environment where you're bound to make strong industry connections.
In addition, you can try getting in touch with your college or university and ask about any financial leads. They are a good source because they have a network of faculty from alumni, lecturers, and even guest speakers who may be potential investors or know of people or organizations that are ready to invest.
6. Create an event
If you have exhausted your inner circle, you might want to consider creating an event to sell out your brand. To maximize the gains, you must ensure your guest list includes the right network of potential investors.
Having the right network of people on your guest list is the perfect way to engage prospective players before requesting funding. In that case, make sure you discuss:
- Your current progress or recent achievements
- Where you see yourself in the coming years
- Your products or services and what makes them different
- Your customer base (Can have customer references such as reviews or buying history as evidence)
- Explain how new capital could benefit your small business
7. Approach successful entrepreneurs
Successful entrepreneurs have a strong track record and most likely have the capital to invest in a company. Even if they are not willing to invest, they can be a great resource for identifying good business opportunities.
However, approaching them directly can be intimidating and dreadful, especially for small and medium-sized entrepreneurs.
To avoid this, it would be best to have pre-existing interactions before asking them to invest. You can find successful entrepreneurs by attending business bureau meetings or joining specialized affiliation groups (i.e., Veteran Business Association). You could even browse online and check the big companies' different associations and try to find a mutual connection that way.
With ongoing communication, you initiate friendships and trust. So, suppose these renowned entrepreneurs see value in your business. In that case, they could even approach you first regarding good business investments.
8. Consider consulting your attorney
Along with helping you with the normal corporate structuring, tax law, or legal documentation, your attorney can link you to potential investors. They have probably worked with hundreds of successful entrepreneurs from the company formation stage. Therefore, they can offer good introductions if they are well known and respected.
After the initial introduction, it's up to you to create the right relations and convince the investor that your business is worth their money.
As a business owner, finding an investor for your small business allows you to explore your full potential and achieve your organizational goals.
Above are some ways you can connect and interact with prospective investors in business. Some may demand more effort than others, but the bottom line is that you should cultivate strong and trusted relationships with all industry players.
Also, remember that while the injection of cash is necessary, you should also strive to work with an investor who can bring more value beyond the money.