How to Attract Investors for Your Start-up

Congratulations! you have a start-up idea maybe you have already established your business, so what is next? The logical next step is to find findings, but is it that easy?

Finding funding is typically one of the most challenging parts of starting a new business.

Because there is a massive potential for failure, that is why normally finding funds and convincing the right investor is really hard. Still, it is your responsibility as an entrepreneur to convince them to jump and fund, making your business idea very appealing and exciting to encourage them.

No matter your expected/desired source of funding, you must have a clear strategy regarding Who to approach and How?

So are there any recommended strategies for persuading investors to jump in? Actually, there are some, keep reading this article to find out.

1- Develop a solid business plan

Proving your business is worthy of risk is what guarantees you an investment, so there is a need for a strong business plan where you can submit your business objectives and goals, demonstrating your expertise and ability to survive in the market.

In your plan prove sufficient knowledge of your target customer, provide a clear and complete description of your product/service, and moreover, include your marketing plan both potentials and threats should be mentioned here.

But always remember you have to approach an investor with similar goals, interests, and objectives to be more comfortable in investing.

2- Develop a Forecast Model

Make sure you are clear, transparent, and to the point in your submitted business model. A transparent, replicable business model that is scalable and as detailed as possible is essential to reflect how well you have planned for the upcoming growth, not only you have forecasted it. 

Be ready to defend your model and prove how it will increase your company’s profitability, and do not forget you have to be realistic in the expected revenue while keeping investors interested.

Create ultra versions of potential, even slightly potential worst-case scenarios, and be ready for a really detailed discussion.

Be ready to prove how your business model will help your company become more profitable. Emphasize financial and market issues, as these are vital areas for investors.

3- Ensure Customer Reference

Investors tend to speak with your customers and check to what extent they are satisfied with your product/service. So demonstrating your customer satisfaction is one of your major assets to depend on in your pitching.

4- Explain Your Financial Statements

How you operate your business is reflected by your financial statement. In particular, investors really care about your cash flow, debts, and equity. The more available cash and equity available, the greater you may get your desired investment.

Do not forget in case you had previous investors or lenders, to provide a capitalization table (cap table) that lays out all the equity and debt ownership and liquidation rankings of the various investors or lenders invested in a business.

5- Justify the usage of the potential funds

What exactly is your business going to do with the funds? To which sectors you will allocate their money? This might be a challenge for your business, but who said it will be easy! Be prepared to explain to investors what milestones you’re aiming to achieve and the anticipated results. 

By showing off how wisely you are going to spend their money and how quickly you plan to grow, you will encourage your potential investor to consider your business to be their next big project.

6- Show evidence of growth

Investors want to know how you plan to utilize your resources to reach and deliver value to customers to gain a competitive edge. So you should inform your investors about the potential size of your market. How many customers can be reached? How long might it take to become a market leader?

Moreover, no business without sales so proves to them that there are people out there ready to pay in exchange for your product/service. This means it must stand out from what’s already being offered in the market. Your differentiators should be easily definable when explaining the sales process to investors, alongside your sales track record.

7- Provide all needed legal and managerial data

From the legal perspective, investors interested in investing in your company will unquestionably have an attorney conduct a complete legal review. 

While on the managerial level, Investors have a keen interest in both you (as the CEO) and the management team, and getting to know your industry background and your business experience will be a huge assist in the process as it will guarantee business growth and the desired positive ROI.

In the end, fundraising is not usually an easy or quick process, it requires patience and persistence. Keep engagement open with your potential investors before your actual need for the fund, and remember instaDeel is here for you.

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