One of the greatest problems most startups face is having a hard time to attract investors. Still, this is a problem that is not as hard to solve as you may think. Sure, everyone likes to be courted, but it is always better to have investors coming to you with an offer instead of it being the other way around. So, with this in mind, here are five simple tips on how to make your startup much more appealing to investors.
1.Start by Showing Results
Now, this may seem a bit paradoxical, but in practice it doesn’t have to be so. Any major project would require the funds you do not possess, but you don’t need to go big from the start. Take a small task, one you can accomplish without straining your budget, and make it your goal to impress the investors. Show them how your business operates in practice and promise them you could do the same (or even better) on a larger scale. This is a bit like making a model home, so that the ‘buyer’ gets to see what the end result will be like after they invest their hard-earned money.
2.Look for the Right Co-Founder
A lot of people assume that being partner with someone means that the both parties will contribute financially to the business. However, sometimes this isn’t the case. In some cases, you will be able to find a partner who is already a name in your business niche. What they will be contributing in is their business reputation and their network of contacts. Just the notion of that person vouching for you may persuade investors to trust you with their money.
3.Keep Your Books Clean
According to people behind Pherrus, one of the first things every potential investor will want to see are your books. Seeing how you ask of them to entrust their money (sometimes even their livelihood) to you and your project, it would only be fair to allow them to see who exactly they are dealing with. For this reason alone, it would be advisable to have your accounting done by a professional. With this and your financial plan in check, you will give your potential investors and creditors all the assurance they need.
4.Offer Something New
If you keep reinventing the same thing everyone else does, then your chances of attracting an investor will depend on pure luck. After all, why would anyone offer you the money to reinvent the wheel, when there is a plethora of other businesses out there offering the exact same thing. For this reason alone, the best advice your company can take is to avoid following the crowd and try to find a way to solve a real problem. Give your investors a vision they can believe in and this will be all the convincing they will need.
Finally, potential investors approaching you will probably inquire about how much have you and your partner invested. If you yourself are cautious about investing in your own business, then how safe can it be to give you their own money. On the other hand, investing all you’ve got in your first enterprise may also not be advisable, because it will make you seem overconfident and even reckless. While risks may be something that brings in the most reward, what investors really want is someone level-headed at the head of their funds.
In the end, making your startup more appealing to your investors means that you first need to know who your potential investors are. Profiling your ‘ideal investor’ helps greatly in tailoring your business to seem investment-worthy. Overall, you have a lot of work to do and each of these method may be useful one way or the other.