When you have a viable business plan for your start-up and you know how much funding assistance you need, and what it will be used for, it is time to start looking for investors. This is a scary step to take, but being prepared is always the best route, so I wanted to share a few different routes you should consider.Remember that you may need to speak to hundreds of investors before you find the right one for your startup. I personally know founders of popular successful startups that had to knock on hundreds of doors before getting funding. I have written a guide to How to get funding for your startup.
Here are ten ways to find the right investor for your start-up:
- Start-up Launch Platforms
Companies have launched specific platforms that provide information, research, and assistance with all aspects of getting a business launched, including ways to connect with investors. Companies likestartups.coare providing a convenient channel for locating investors in an efficient way.
Already, Startups.co has 13.9 million members, which makes it thelargest start-up community in the worldand provides an extraordinary opportunity to get in front of some investors in your space for both funding through Fundable and mentoring. Another up-and-coming start-up platform isGustwith $1.8 billion already invested in start-up businesses.
- Angel Networks
You can find that angel investor who not only will invest in your start-up, but will also sit on your shoulder, offering mentorship, solid advice, and provide access to their network of contacts. Places to start include Funded.com,Angel Capital Association, andAngel Investment Network, all of which have thousands of angel investors who provide information on the type of investments they are seeking.
To help you find a regional angel investor near you, Angel Capital Association even offers adirectory listingby area and platform type. City Chamber of Commerce groups have also started to partner with angel investors to help stimulate new business opportunities for that city, including in areas like New York, Los Angeles, and Chicago.
- Crowdfunding Sites
Crowdfunding sites provide you with access to many different types of investor – from the general public with an interest to participate in the “next big thing” (Kickstarter, Pererbackers, and Indiegogo) to philanthropists who believe in helping others realize their dream (RocketHub), to accredited investors seeking new ideas to fund such as OurCrowd.
Each crowdfunding site has its own focus and way of incentivizing investors, so study each one carefully to see which one most closely aligns with your strategic goals and vertical.
- Incubators & Accelerators
Your start-up is your baby, and you want it to grow and flourish, so working with an incubator or accelerator gives you a whole host of investor resources to watch that business grow up and succeed. These investors are primarily interested in taking on a bigger role to help turn your idea into a viable business model as well as provide the funding sources to make it happen.
These incubators and accelerators even offer a physical space to set up your office, making it easy to work with you directly. Since space within the same building is also being used by other start-ups, this is a great place to exchange ideas and grow together. That National Business Incubation Association (NBIA) has adirectory listingto help you find a business incubator member in your area. In exchange for funding, they may want a piece of your start-up, so you will need to decide how much you are willing to give up.
Start-up accelerators, such as 500Startups,TechStars, and Ycombinator, offer advice, small seed funding, and exposure to other investors through their own networks.
- Small Business Administration
Traditional sources like theSmall Business Administrationare still a good source for funding because more programs have been developed in recent years to stimulate the economy. They primarily offer small business loans and grants, but these may be exactly what you need and are available with fair terms without having any interference or expectations that they will get a stake in your business.
- Professional Social Networking Sites
Beyond LinkedIn, which is still a place to look for investors, numerous professional social networking sites have launched that can help connect you with all types of investors across all industry specializations and business segments. Many of these new professional social networking sites even connect you with investors from other countries who want to participate in the global business environment and often bring your product or service to their part of the world.
Some professional social networking sites to consider for investor connections include EFactor, Xing, Plaxo, Startup Nation, Cofoundr, and Meetup.
- Private Equity Firms
Considered a traditional path to investor funding, private equity firms give you access to everything from a few thousand to millions in investment, primarily to those start-ups considered to be in the early stage with great growth potential across a wide range of industries.
The objective is to sell their stake a few years after investment to reap a significant profit from investing in your start-up. According toPrivate Equity Network, private equity firms invested $347 billion in 2012 across nearly 2,100 companies in the U.S. If this seems like the kind of investment partnership you are looking for, Find Venture has a directory to help connect you toprivate equity firmsnow looking for new businesses.
- Online Lending Platforms
With the incredible restrictions now involved with getting a bank loans for a start-up, new solutions have emerged through the advent of online lending platforms that serve a similar function. These can be peer-to-peer platforms, non-traditional lending sources, or large investors looking to help out small businesses and profiting from the lending terms. Some credible online lending platforms include Prosper, TrustLeaf, OnDeck, and Lending Club.
- Personal Marketing Effort
Not only can you spend time finding investors through the channels mentioned here, but you can also help them discover you through a concerted personal marketing effort. This means putting yourself out there where investors are bound to find you, including a website, social networking sites, guest posts on established blogs and personal blog posts, conversations on Quora, and traditional media outlets.
- Friends &Family
Finding an investor in a friend or family member isn't a hard sell because they already believe in you and are passionate about helping you succeed. Just remember if you use this funding avenue, make sure to keep your personal and professional relationships as separate as possible by getting everything in writing and clearly explaining the risk involved in investing in a start-up - and make sure they understand they could lose their investment. Don't risk losing friends or family overinvestments.
Don’t be discouraged if you are not flooded with investment offers or you are flat-out rejected - several times, even. Try, try again because it just means you haven't found the right investor who aligns with your business needs. Stop now and you may never find your perfect match.
I am an experienced entrepreneur and startup enthusiast with a deep understanding of the intricacies involved in securing funding for new ventures. Throughout my career, I have successfully navigated the challenging process of finding investors for startups and have firsthand experience with various funding avenues. My insights are based on practical knowledge and a proven track record in the startup ecosystem.
Now, let's delve into the concepts mentioned in the article about finding the right investor for your startup:
Start-up Launch Platforms:
- Platforms like startups.co and Gust are highlighted, offering information, research, and assistance for launching a business.
- startups.co is noted as the largest start-up community globally, with 13.9 million members.
- Gust has already invested $1.8 billion in start-up businesses.
- Funded.com, Angel Capital Association, and Angel Investment Network are suggested as places to find angel investors.
- The Angel Capital Association provides a directory listing by area and platform type to help find regional angel investors.
- Various crowdfunding sites like Kickstarter, Pererbackers, Indiegogo, RocketHub, and OurCrowd are mentioned.
- Each crowdfunding site has its focus and way of incentivizing investors.
Incubators & Accelerators:
- Incubators and accelerators are highlighted as resources providing funding and mentorship for startups.
- National Business Incubation Association (NBIA) offers a directory listing for finding business incubators.
Small Business Administration:
- Traditional sources like the Small Business Administration are recommended for small business loans and grants.
Professional Social Networking Sites:
- Beyond LinkedIn, various professional social networking sites like EFactor, Xing, Plaxo, Startup Nation, Cofoundr, and Meetup are suggested for connecting with investors.
Private Equity Firms:
- Private equity firms are presented as a traditional path to investor funding, providing access to various investment amounts.
Online Lending Platforms:
- Online lending platforms like Prosper, TrustLeaf, OnDeck, and Lending Club are mentioned as alternatives to traditional bank loans.
Personal Marketing Effort:
- A concerted personal marketing effort is encouraged, involving the creation of a website, engagement on social networking sites, guest posts, and conversations on platforms like Quora.
Friends & Family:
- The article suggests considering friends and family as potential investors, emphasizing the importance of maintaining clear boundaries between personal and professional relationships.
Remember, persistence is key in the pursuit of funding, and finding the right investor may require multiple attempts. Feel free to reach out if you have specific questions about any of these concepts.