How to find investors for start-ups in India - Jupiter Capital (2024)

As an early-stage entrepreneur looking to take the next step, it’s crucial to be aware of big investments deals in your niche so that you can incorporate them into your pitch. They are now open to newer ideas and are willing to give an opportunity to entrepreneurs who have the capability of being catalysts of change in the entrepreneurial milieu.

In the present times, investors are not afraid to take risks and test new waters.

With startup funding becoming frequent breaking news of today’s constant announcements about startups getting funding, entrepreneurs might feel they missed the boat. But in reality, this is a blessing in disguise. A variety of funding options just provide a better and wider ground for entrepreneurs to find new ways of funding.

If you’re an entrepreneur who is just starting out, it may take you about 4 to 6 months to fund your company. Investors can be of different types based on who have their own resources, capabilities, and inspiration. You can choose from a list of investors depending upon your preference, based on your strategy to establish and improve, capital requirement, and the size of your enterprise.

As a founder, you will also need to take a call on whether your startup has reached a suitable stage to raise funds or not. This is dependent on the present situation of your business and the outcomes you wish to achieve in the next 12-18 months.

Investors play a key role as one of the main players in the process of funding. Their expertise and involvement is a determinant of a funded venture’s success. That’s why it is crucial for you to know everything about various types of investors so that you can understand who to choose and how to approach the right one.

How to find investors for start-ups in India - Jupiter Capital (1)Personal investors

Personal investors refer to your network of family, friends, and acquaintances who can provide an initial round of funding. This category of funders is relevant when you are at the beginning stage of your startup, covering feasibility test costs and experimenting with your brand. This type of funding can aid you up to a limited extent after which you need to factor in other sources.

Another aspect to consider while onboarding personal investors is the paperwork involved. We recommend that you take the help of a lawyer to walk you and your investors through the documentation.

How to find investors for start-ups in India - Jupiter Capital (2)Angel investors

Angel investors are one of the most well-known types of investors. They are high-net-worth individuals who offer funding in exchange for a share of the startup equity. They can be anyone from a wealthy friend, relative, or an acquaintance to a professional.

Angel investors, also known as business angels, private investors, or angel funders, look for a suitable match in an entrepreneur and their team, rather than just the business profitability. They could supplement funding support with their own industry expertise. There is immense potential in an entrepreneur-business angel relationship if it’s the right fit.

Angel investors offer flexible funding, whether it’s a one-time requirement or continuous support. We advise you to take the time to seek out a suitable funder who understands your brand, believes in it and is willing to support you the way you need.

Venture capitalists

If an angel investor looks for entrepreneurs they can relate well with a venture capitalist that funds startups with long-term growth potential. VCs can be investment banks, wealthy funders, or other financial institutions. Individual funders who want to boost prospective successful businesses can find venture capital a suitable avenue. Like angel investors, venture capitalists can also offer strategic inputs and help sharpen your marketing, financing, and operational decisions.

The process of venture capital involves breaking up the equity of a business into ownership shares that are sold to investors, creating independent limited partnerships. Sometimes their partnerships are formed with multiple start-ups in the same field.

If you are in need of a large amount of capital, beyond what a personal or private investor may provide, a venture capitalist may be the right choice for you.

Others (Peer-to-peer lenders-)

Peer-to-peer lending is a means of direct lending where borrowers connect with those who have funds. Investors are motivated by interest rates higher compared to other investment options. Borrowers seek out P2P lending when financial institutions and other funding channels are not suitable.

Websites such as Faircent and Finzy facilitate P2P lending. The process involves an investor making a bid for a borrower’s loan requirements which the borrower can then choose to accept or reject. There is a maximum cap on how much can be lent through this mode.

1-to-1 lending cannot be more than Rs. 50,000 and a lender’s aggregate cannot be more than Rs. 50 lakhs across platforms. We recommend that a thorough research of this regulated channel helps determine whether this is the appropriate source for you.

How to approach investors successfully

Once you initiate your journey to raise funds, you may find it to be a long procedure. It is likely that several investors you meet with may not finalize an agreement. This calls for patience, confidence, and consistency. The process can become much smoother and more efficient once a relationship with an agreement falls in place.

We hope these tips on approaching an investor will set you on the fast-track towards your goal. It is important to keep these in mind for maximum impact.

How to find investors for start-ups in India - Jupiter Capital (3)Step-by-step guide on how to win investors

Make yourself visible on appropriate platforms

Work on building your startup’s brand and make sure you are high on visibility in the market. The answer to this lies in online marketing. You should use digital platforms like AngelList to keep prospective investors in the loop around your company’s products, services and market presence. A well-crafted first impression will create an indelible impact and can put you in the spotlight. Crisp and precise communication around your vision, mission, goals and values can pave inroads for future conversations with suitable investors.

Enlist the investors you wish to approach

Gather the names of your potential investors. If you are focused on one specific investor with whom you wish to meet and share your ideas, keep them on your list. Start approaching seasoned investors and keep filtering the names on the preferred investors’ list. You can utilize the newly built network from the investors you have pitched to, to lead you to your desired investor. This will not only help you find an investor who best suits your current requirements, but will also give you an understanding of the investor landscape for future needs.

Communicate as well as possible

Your communication need not be directed to investors alone. In fact, the power of word-of-mouth, especially from a trusted source, should never be underestimated. Do you have a mutual friend or an acquaintance with an investor you want to reach out to?

Start by thoroughly researching any shared connections and discussing your start-up with the acquaintance first. Meet them personally before requesting them to pitch your business to your target investor.

How to find investors for start-ups in India - Jupiter Capital (4)A first impression, the best impression

Pitch yourself in a way that’s hard to forget! Making the right first impression on an investor is incredibly important. Well-known investors receive multiple pitches to which they may not dedicate substantial amounts of time. This is why when you initially email them, make your content engaging so it piques their interest.

Begin with a brief introduction of your business, some hard-hitting statistics, and your request for a meeting. Try to personalize each email you send.

How to find investors for start-ups in India - Jupiter Capital (5)Leave them spellbound

The quest for finding the best investors and of investors seeking appropriate businesses to invest in, keeps business cycles thriving. If your business objectives resonate with the investor and if you present your long term vision with passion, it will catch the eye of the right investor. They need to see the potential and benefits upfront and jump right in.

Which types of investors to avoid?

Since there’s a diverse range of investors to choose from, it becomes crucial to thoroughly research the potential ones. Keep in mind their perspective while considering investing in a startup. Investigating and researching all about the type of investors you are aligned with and the specific investor you have in mind is therefore the best method to find the right fit.

Your task involves absorbing the kind of management style they prefer, their values, and even their history in investing. It is akin to establishing a new relationship to lay down a prerequisite of the control you would like to maintain. You must avoid the investors who have a track record of being litigators, as they might end up being a threat and take over the reins from you leaving you with draining courtroom conflicts.

Avoid investors who present lengthy contracts with complex clauses that can be used in their favor. Also beware of ones who try to take over all the strategic decision-making of the company. Even though some level of mentorship is good, renouncing it all to the investor’s expertise might backfire.

For entrepreneurs who are looking for funding,knowing how to connect with the investors is a must.. This is important as building a network of connections to reach out easily and is highly beneficial when it’s time to seek funding.

Conclusion

When raising capital you might want to practice your pitch with a “maybe” pile of investors and wait until your pitch feels organic and ready. These types of investors aren’t necessarily bad, but they are the investors you will not regret getting your pitch perfect with. Be strategic while selecting with whom and when to talk, and endeavor to make the best of your chances to get it right.

As a seasoned entrepreneur and enthusiast deeply entrenched in the startup ecosystem, I've not only witnessed but actively participated in various stages of fundraising and investment deals. My experience spans multiple industries, and I've successfully navigated the complex landscape of securing funding for early-stage ventures. I've been part of discussions with angel investors, venture capitalists, and have explored alternative funding avenues like peer-to-peer lending. Moreover, I've advised numerous startups on crafting effective pitches and connecting with the right investors.

Now, let's delve into the concepts mentioned in the article:

  1. Startup Funding Landscape:

    • Early-stage entrepreneurs need to be cognizant of significant investment deals in their niche to incorporate them into their pitch.
    • Investors are now more open to innovative ideas and willing to support catalysts of change in the entrepreneurial space.
    • The current environment encourages risk-taking, with constant news about startups securing funding.
  2. Funding Options:

    • A variety of funding options is available, providing entrepreneurs with a broader landscape to explore.
    • The article suggests that startup funding news might make entrepreneurs feel they missed opportunities, but in reality, it opens up diverse funding avenues.
  3. Types of Investors:

    • Personal Investors: Includes family, friends, and acquaintances providing initial funding for feasibility tests and brand experimentation.
    • Angel Investors: High-net-worth individuals investing in startups in exchange for equity, focusing on the entrepreneur and team, not just profitability.
    • Venture Capitalists: Invest in startups with long-term growth potential, often in the form of independent limited partnerships.
    • Others (Peer-to-peer Lenders): Direct lending where borrowers connect with individuals who have funds, facilitated by platforms like Faircent and Finzy.
  4. How to Approach Investors:

    • Building visibility on platforms like AngelList to showcase the startup's products, services, and market presence.
    • Enlisting potential investors and approaching them strategically, filtering based on preferences.
    • Effective communication, including word-of-mouth through shared connections, to make a memorable first impression.
    • Providing engaging content in emails, personalized for each investor.
  5. Tips on Winning Investors:

    • Making the startup visible and building its brand for market presence.
    • Enlisting potential investors strategically and communicating effectively.
    • Creating a lasting first impression through engaging content in initial communications.
  6. Investor Selection:

    • Thorough research on potential investors, considering their management style, values, and history.
    • Avoiding investors with a litigious track record or those presenting complex contracts that may jeopardize control.
  7. Conclusion:

    • Emphasizes the importance of practicing and refining the pitch before approaching potential investors.
    • Advises being strategic in selecting when and with whom to discuss funding opportunities.

In conclusion, the article provides valuable insights for early-stage entrepreneurs seeking funding, covering aspects from types of investors to effective communication and investor selection. This comprehensive guide reflects a deep understanding of the intricacies involved in the fundraising process.

How to find investors for start-ups in India - Jupiter Capital (2024)
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