Angel investors and venture capitalists can help you secure funding for your business, but how do you attract investors for your start-up?
Starting a new business is a beautiful thing but it can be a bit intimidating. Behind every successful start-up is a ‘risk-taking’ investor who dared to take the leap of faith at an early stage when the stakes were higher, willing to gamble with the hopes of funding the next big thing.
Starting a new project or company can be very challenging especially if your financial strength is low. Some small business owners rely on loans, the occasional financial help from family and friends or fundraising for capital and investment. Venture capital is money, technical or managerial expertise provided by investors to startup firms with long-term growth potential.
Venture Capitalists
Venture capitalists are a form of private sector finance dedicated to helping new companies establish themselves and grow. They typically seek out opportunities in growing markets like technology, IT, biotech and smart homes. Venture capitalists provide all the cash that your company needs, but often at a high price, which usually involves a profitable exit strategy, or demanding enough shares in your company to influence decision making. wealthy individuals, insurance companies, pension funds and foundations may pool money together into a fund to be controlled by a venture capitalist firm.
Angel Investors
Angel investors are individuals who personally invest in start-up companies to help them grow. Apart from cash, angel investors also provide industry expertise, inside knowledge of customers and competitors, personal network contacts and potential partnerships. They serve as mentors to these start-ups. The advantage is that financing from angel investment is much less risky than debt financing. Unlike a loan, invested capital does not have to be paid back in the event of business failure. The disadvantage is the loss of complete control as a part owner.
Here are a few key pointers to attracting investors for your business
- Passion: if you can make an angel investor feel that you have a special quality they’re looking for and will do anything it takes to succeed, then your chances of attracting investment are much higher. So remember to be passionate and let it show on your proposal.
- Commitment: prove to investors that your passion is your business and commit wholeheartedly to your project. If you’re able to convey your enthusiasm and drive to them, they’ll listen.
- Traction: investors want to see that a concept is gaining ‘traction’ before they part with their funds. You have to prove that there’s a sizable market for your product or service and that the wheels are set in motion for its success.
Strong management team: investors looking for a strong and balanced management team flexible and skilled enough to face the challenges that may come their way. Most successful companies are founded on great teams; a visionary, passionate leader with a global perspective, a talented technician with the skills to turn that vision into reality, and a marketer to create awareness for the product. Valve gate consulting has a strong management team to help startups address the needs of businesses at different stages of development.
- Snappy pitch: this is also known as the elevator pitch. Keep it short, snappy and straight to the point. Describe your key selling points.
