Many business owners start their business by seeking startup investment. Statistics show that over 90% of new businesses collapse in the first year because they couldn’t attract investors.
As a business owner, getting investors for your startup business could launch your career into a lifelong one in your Industry. To achieve your long-term business goals, investments are the fuel, and you must find it with the same energy spent to find clients for life insurance.
There are many ways to attract investments to finance your startup. While it’s not cool that your business depends on investors to function, you need to raise funds to stay in business. Healthy businesses have startup investors who have helped them with business investment.
Doing so makes it easy to start and keep up with the starting costs. Before you can start effective investment hunting for your business, you need to develop a business plan.
Developing a Business Plan to Attract Startup Investors
Every business should have a business plan. While this may be solely for funding, it shows the direction of the company. It’s a meaningful way to attract investments and be rid of the financial puzzle.
Having a refined business plan tells a potential investor what exactly you need, why you need them, and what it’ll do for your business. It also tells potential angel investors how long the money will take you and its effect on your startup business.
Your business plan must be your pitch, your haven, to attract startup investors. It must include the problem your business wants to solve, the purpose, and the future of the business.
In the heart of the business plan, you must include the budget, the things you need the money for, and the return on business investments.
Ways to Find Investors and Attract Investments
1. Venture Capital
Venture capitalists are business people who invest in your business with other people’s money. For this, they have a professional duty to keep risky investments to the barest minimum.
This is why many of them are skeptical about the business they invest in, and it’s why it seems as if they aren’t interested in small businesses.
Venture capitalists are interested in your business idea if you have proven management skills and exceptional market opportunities. They look out for businesses that’ll produce huge increases and an incredible rise in value after a few years of investment.
Your service must have high demand, which will enable you to supply at an incredible rate, enhancing your productivity level. However, if you feel that your business can’t hit the market in the short term, although the long-term appreciation is evident, you can consider other options.
2. Apply for Contest
Many business startups grow their business by applying and winning contests. All you need is to develop an impeccable pitch that best describes your business.
Don’t forget that you’ll need to add your business plan to any submission you’ll make, especially if it’s requested by the body organizing the contest. This isn’t to impress the potential investors; it’s about gaining their confidence that your business is worthwhile.
If this works, you’ll get the required publicity for your business.
3. Angel Investors
Angel Investors are a common way to attract investments for your business. Angel investors are individuals or groups of people who invest their money in your startup business as a way to help.
Of course, they’ll wait for a few years when you see results before they get their return on investment.
Unlike venture capital, you have direct access to angel investors who are always interested in investing in businesses with the potential for long-term success. However, your business must have been doing well before you can apply for their help.
If you’re starting, it may not be easy to get them to invest in a business that hasn’t developed or has a chance of making it in the market.
To find angel investors, turn to government agencies, business incubators, business development centers and try networks like AngelList or Gust Angel Network.
4. Get Investment from Commercial Lenders
These are institutions that will lend you money to kickstart your business. While you may think that banks are antagonists of business owners, it’s the opposite. Every bank is interested in profit, and anything that will jeopardize this is always avoided.
However, you can reach out to any commercial lenders around you. All you need is a solid business plan and collateral for your loan. If you don’t have that, you need a reliable guarantor.
5. Try the Small Business Administration (SBA)
SBA guarantees loans to startups as they are created solely for them. You can apply for a loan from SBA just as you apply for loans from commercial banks. While you need a third party as a guarantor, you also need personal assets as collateral.
As certified lenders, SBA can help you grow your business with its funding, which is sometimes government-issued.
6. Source Funds From Friends and Families
Families and friends could be the most reliable source to attract investment. This is because they can stand for you when others don’t. This doesn’t mean they can’t be like angel investors too, who want to be sure they’re not betting on a risky and fragile business idea.
Your business must be solid enough with a high potential of success to gain the support of family and friends. All these could be your parents, cousins, siblings, and friends who believe in you.
Aside from their financial support, they can also help with publicity as your startup investors.
The internet today allows you to tell the public of your business plan and gain financial support. This is a way to attract investors from the internet without particularly knowing them.
All you need is to develop the purpose of your business, the amount you need, and the impact of your business.
You can also emphasize the long-term goals of your business and the problem it solves to demonstrate its significance. You can consider the likes of GoFundMe, Kickstarter, Indiegogo, and any other crowdfunding platform of interest.
Grants are another way for business investment. You can apply for a business grant from both private individuals and the government. All you need is a perfect business plan which could impress those awarding the money.
This is why you need a solid business plan, which includes the problems, the solution, the budget, and the managerial structure. All these will help you secure the financial value your business requires to perform in the market.
To attract investors, you need to have developed a feasible plan. The only way to show you have this is by having a solid business plan.
You then need to attract investments by trying venture capital, applying for contests, using angel investors, commercial lenders, loans from SBA, family and friends fund sourcing, crowdfunding, and grants.
All these can help you secure the necessary funds for your startup business and also sustain it until it’s able to perform without maximal external financial support.