How to find investors to jumpstart your business
Start-ups and SMEs need a lot of funding to grow their businesses. Securing funding on your own and making up your capital at the start of a project might be a huge challenge. A lack of funding can result in the delay of expansion or even production. This is where investors come into play. Early-stage businesses often turn to investors to lay a strong foundation for their products and strategies.
Investors are the ones that will put money into your bank account in hopes of making a profit that will last. These investors will look into businesses that have the potential to make a profit. There are several types of investors, and each of them has its own terms. Read on to learn more about the different types of investors and how to find them.
What are the different types of investors?
Each type of investor has different things to offer aside from funding. Since investors are involved in the company’s process, understanding their different types is essential to engage with the right one.
1. Angel Investor
Angel investors normally engage themselves at the start of the business, or the “seed” stage of the business. They look for start-ups that have the potential to thrive and give them a kickstart in terms of funding.
Usually, they offer a better deal than other types of investors. They are also there to assist in the company’s build-up, as they are also looking for a return on investment. Their investment is necessary for a company to expand at an early stage.
2. Personal Investor
To start a company, funds are needed, no matter what phase you are in. At this stage, you can turn to your family, friends, or even acquaintances and ask them to invest in your start-up. These kinds of investors are known as personal investors, and while they can aid with financing, there is a cap on how much they can put into your business. This is because personal investors make investments using their capital.
3. Venture Capitalist
Expanding your business might require a lot of funding. To secure a large sum of funding, venture capitalists can provide you with the amount that you require with the addition of expertise. Venture capitalists usually go for small businesses that have the potential to be respectable firms. In return for their investment, they seek equity.
How do investors generally operate?
Typically, there are different types of investors, and all of them have different terms and operations. To lock in an investment, understanding investors is crucial. There are three modes of operation for investors.
Family, friends, and acquaintances are pre-investors. They are not professional investors who can put an enormous amount of cash into your business.
2. Passive Investors
Passive investors invest their money in the chosen company, but they do not play a role in the company. They invest their money in the hope that it will grow. They are considered professional investors, but once they invest, they have no control over the company’s processes.
3. Active Investors
Active investors are the ones that commit a large sum of money and play a role in the company’s growth. These investors take part in the decision-making of the company and provide their expertise. Active investors play a role in the company’s financial future, so they participate actively in the company’s direction to ensure that the company adds value.
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What are the ways to find investors?
If you are having difficulty finding investors, it is most likely because you are not going through the proper channel to find investors. There is more than one way to approach investors and engage with them. You can use these methods to secure investments and expand your business.
Events are made for people to enjoy themselves and be social. The next event that you go to, focus on being social. You might get the chance to land an investment if you approach the right people at such events. You should know who is attending the events so that you can prepare to strike up a conversation with them and pitch your ideas.
2. Social Media
Social media is a powerful tool to get connected with investors. Use the publicity you can gain to attract investors. As social media is open to everyone, strengthen your marketing tactics. You are also able to directly message investors. One good message is all you need to open up more opportunities.
3. Online Platforms
As technology advances, so does the investing industry. There are online platforms specifically for investments. All sorts of investors could be found on such platforms, and they are eager to invest in start-ups. Platforms such as ECF (Equity CrowdFunding) and P2P (Peer-to-Peer Lending) are a great start for you to find investments if you do not have any connections.
4. Market Your Product
Growth is an important aspect of a business. Getting the proper funding might take time. In the meantime, businesses should market their products and ensure their audience is aware of the brand. That way, investors out there can also be alerted to your business.
How to approach the right investor for your business?
The pool of investors is so big that it might be hard to choose one that suits you best. Every investor has terms and conditions that you must follow to reach a mutual agreement. As there are so many options available, doing some research on potential investors might help you score an investment.
Step 1: Assess what you need from an investor
There are multiple types of investors. You need to know what you need to get the most out of your investors. They could supply you with more than just funding. They have the expertise, networks, and resources to make your company thrive.
Once you know what you need, find investors who can cater to your needs. You also have to know whether they would invest in a company of your stage and the demographic area that you work with, as some investors are particular about these things.
As many investors will be on the top board, you need to find those that have the same mission and understand your vision to make discussions easier.
Step 2: Find the right place
Go through the proper channels to find investors that suit your company. You can look into their profile to see if it is worth approaching them. You need to know how to engage with them to determine whether they are the right fit for you.
Step 3: Learn about the investor’s track record
Many investors have large capital and can support your business in terms of funding. But funding is not the only thing you should consider. You may see whether they have a good track record and whether they have invested in the same industry as your business.
Step 4: Go networking
Funding aside, you should look into the connections that investors have. This could be a big advantage, as you could engage with others and find areas to improve. This could also indicate the reputation they have, as you can see whether they are connected to prestigious companies.
It will also help you determine which investor is the right fit. You can assess your suitability with your investors. By doing this, you can find chemistry and apply it to your pitch, which will become a big advantage.
Finding the right investors is a challenge, and you need to go through the mind of an investor to persuade them to invest in your company and all the other resources you might need.
How NetWORQ can help you to meet with investors
NetWORQ is an assisted networking event by WORQ that helps you get connected with people who might be your next collaborator or investor. WORQ, which has approximately 10,000 community members in the coworking space, promotes collaboration not only among its members but also among business practitioners throughout Klang Valley.
During the previous round, 42 percent of the attendees were from the tech industry, whereas integrated marketing, sales and partnership, and finance – including the funding industry, make up 15 percent of each of the demography.
NetWORQ is one of the events that can help you expand your network. Do not miss the opportunity to bring your business to the next level. Don’t miss out on our next NetWORQ, get yourself updated with our events!