How Startups Can Begin Securing Investors

photograph of two businessmen sitting at a desk together and shaking hands over a document to illustrate securing investors
Most startups struggle with cash flow. However, securing investors drives their business forward and increases their chances of success.

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One of the most difficult tasks of every startup is securing investors. Sure, you’ve got the perfect business idea, but how can you execute your plans when you’re on a tight budget? One of the biggest reasons startups fail is simply because they lack cash flow. In spite of this, entrepreneurship is still on the rise in the United States. 

In fact, the US is in the driver’s seat when it comes to the formation of startups. Proof positive? The United States Census Bureau reports that business applications for September 2022 alone amounted to 425,741.

While every business may be able to find investors at some point, getting the right one is not as easy as it sounds. You have to sell the idea that your business is the best in the market. And when you’re talking to experienced professionals, your presentation needs to be perfect. What good is an innovative business if, in the eyes of investors, the owner doesn’t have what it takes?

To help your startup with securing investors, here’s a list of important strategies for getting that stamp of approval.

Prepare a well-researched business plan

A solid business plan can make all the difference in winning over investors. It has the power to convince them that your business is worth the risk after all. You’ll need to provide statistics, the long-term plan of your business, and why you need the help of an investor. However, you don’t have to include every little detail at first. There’ll be time for a deeper dive once you have them hooked.

A business plan should be detailed, but not too difficult to comprehend. It should also recognize the risks and opportunities of the business. At the end of the day, anyone can say their business is the next big thing. But if you don’t provide any relevant information and data to back your claims, it won’t matter to investors. What’s more, having a business plan that’s easy to digest makes you stand out in an industry saturated with startups.

Define what makes your business unique

Every startup business owner should know this by now. However, this is the most important strategy your business needs to get right. When you’re practicing your pitch to investors, remember that you’re also talking to potential customers. The most vital question you need to answer is: “How does my brand differ from what’s already in the market?”

photograph showing hand of entrepreneur using tablet and graphs in the hopes of securing investors for business
Image source: Unsplash

Be it your product, service, location, or even staff, investors will be more inclined to invest in something unique. Ultimately, every investor and business owner is a natural risk-taker. They’d be more willing to shell out money for a product or service that’s not already in existence. 

Don’t make it all about yourself

No business can reach its full potential if not everyone is committed. When an investor backs your business, they’re not only putting their trust in you but also in your team. Surrounding yourself with talented and loyal professionals will inspire confidence. What’s more, good investors tend to invest in  people first and ideas second. Having a reliable team indicates that your business is capable of pushing through even in the toughest of situations.

Research your possible investors

Every investor is different. That said, when you create your presentation or plan where to meet, make sure to tailor it to their interests. Remember, some of these possible investors are people you’ve never even met before. And first impressions matter, especially in the business world. 

In fact, studies show that it only takes seven seconds for someone to have an impression of who you are. Make sure your meetings are fun, interactive, and of course, interesting. When you do, it increases your chance to secure investors. 

Practice your presentation

It’s essential to ensure that your presentation is perfect. As writer Robin Sharma once said: “Practice daily because the quality of your practice determines the caliber of your performance.”

photograph showing business presentation for the purpose of securing investors
Image source: Unsplash

When securing investors, it also helps to ask for feedback once you’re done giving your pitch. You have to accept that not all investors will be in awe of your presentation. By being open to criticism, you can improve on your lapses and build on what you did right. When you find the right mix, your startup will be on the right track to success.  

Comply with all necessary legal requirements

It is an established procedure for investors to have an attorney perform a complete legal review of your company. Don’t take this the wrong way, this is actually a good sign! It shows that an investor is genuinely interested in helping you with securing funds for your business.  

Although there’s a long list of essential business documents to handle, it will benefit your business in the long run. In this process, the potential investor will gain a deeper insight into your company and how it operates. Even if you tick all the boxes, if you’re not state compliant, all your work will go out the window. So always make sure that your business is up-to-date with state requirements before you start work on securing investors. 

Final thoughts

Investors may not be necessary to start a business, BUT they are integral in helping you grow your business. Securing investment gives your business a fighting chance to compete with established companies in your niche. Remember to keep note of the following strategies to increase your probability of success:

  • Prepare a well-researched business plan
  • Define what makes your business unique
  • Don’t make it all about yourself
  • Research your possible investors
  • Practice your presentation
  • Comply with all necessary legal requirements

When you are successful in securing investors for your business, remember it’s not only about how much money they give. Good investors will also provide help in the form of mentorship or by connecting you with useful contacts. 

Don’t forget that securing investors means they are taking a risk on your idea. It’s important to reassure them that your business will be successful and that they’re making the right decision. Congratulations on starting your own business and good luck with the rest of your journey!

“There’s no shortage of remarkable ideas, what’s missing is the will to execute them.” – Seth Godin

Featured image source: Sebastian Herrmann on Unsplash

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