How startups can secure investment

If you've come up with an impressive business idea and assembled a team around you, it might be tempting to feel like the hard part is over. However, until you've secured some way of funding your project, it can easily evaporate before your eyes.

A good business can not succeed without some financial backing. As the old saying goes, ‘’You’ve got to spend money to make money’’. But how do you find those lucrative investors?

Not every great entrepreneur is a natural salesperson. But the reality is that if you want to secure investors you need to be able to market your idea (and yourself) to potential backers.

The sooner you receive investment the better so follow our top tips to help you bag some generous contributions.

To read more advice on startups from seasoned entrepreneurs, read this.

Decide what kind of investment you would like to receive

Decide what kind of investment you would like to receive

The first thing that you need to do is decide the kind of funding route you want to go down. Are you looking to tap angel investors or venture capital, or are you taking a more homegrown approach and opting for crowdfunding or bootstrapping your business?

Be realistic about your aspirations here. If you’re not sure about your options reach out to a mentor or veteran founder. Their advice could be invaluable. Make sure your decision is backed up by research.

Create your investor hit-list

Create your investor hit-list

Next, you should write down a list of key investors in your industry. Create a document to keep track of them. I recommend using Excel or a similar programme that allows you to track various different opportunities at once. List the investor, your point of contact, similar companies they’ve funded and any notes from your phone calls.

Sure, this might seem a little bit excessive but remember that you are going to have lots of calls and meetings, this is just an easy way to stay on top of everything. You don’t want to accidentally call the wrong investor because you got your wires crossed. Organisation is key!

Make the right connections (right away)

Make the right connections (right away)

Even in the early stages of developing a business idea, you should be thinking about funding. As your idea progresses, your network should also be expanding to include important figures in your area of industry (the deeper the pockets, the better).

Read more about different ways to fund your startup here.

Use your network

Use your network

Would you be more likely to donate cash to a startup founder who cold called you or one that you met over drinks with your friend? Exactly. Use your current and expanding network to forge important connections.

Be calculated about it, make a comprehensive list of anyone you feel may make a valuable connection.

LinkedIn can be a very useful tool in discovering links your network may have to potentially useful groups. You can check organisations to see if you have any connections affiliated with them.

You may also want to consider widening your pool of potentially advantageous contacts through networking events for entrepreneurs and startup founders. There are lots of events held across the UK which could get you in the same room as vitally useful people.

To see a list of the best events for aspiring entrepreneurs in the UK, click here.

Hone your pitch

Hone your pitch

Once you have secured some valuable intros you need to work on a killer pitch. Remember that investors don’t have a lot of time. They don’t want to spend 30 minutes reading a lengthy pitch so keep things short and pithy.

Include all of the most important and exciting information about your startup in a format that is easy to copy and pasted or forwarded. Focus on the problem you're trying to solve, instead of launching in with anything too technical.

Remember that investors want to see the potential for returns. Make sure you show how your business will grow over time and create a steady revenue stream.

Ask for the right amount

Ask for the right amount

This is an important step that many entrepreneurs overlook. While searching for investment, you need to be sure that you are looking for a reasonable amount. You don’t want to put investors off by asking for the largest conceivable amount or lose out on cash because you’ve undervalued your needs.

If a prospective investor delves deeper into why you’re asking for a certain amount, you need to be ready to supply them with answers. If you need to, consider consulting a financial advisor to decide on the appropriate amount. Make sure your figures and your research stack up.

Have your financials at the ready

Have your financials at the ready

Although depending on what stage you're at, it can be difficult to come up with concrete figures, being able to provide coherent and comprehensive numbers on your business' current state and the projected revenue in the short term (between one to five years) is a huge plus.

Show how you will use the investor's money and the returns investors should expect to see on their contribution and within what time frame.

Persevere

Persevere

During your quest for investment, you’re going to hear the word ‘’no’’ a lot. In fact, there will be days when you are convinced that no one is interested in your brand and the ideas that you are bringing to the table.

However, it’s important that you don’t lose heart (especially on the hard days). Remember while 9 out of 10 investors might say no, you just need one champion to take your business to the next level. Always accept rejection gracefully because you never know when your paths may cross again.

Harden your heart to rejection

Harden your heart to rejection

Even if you’re almost certain your pitch is the type of thing a particular investor would be interested in, there are hundreds of reasons why someone may say no. Expect to hear this word a lot during your fundraising efforts.

The most you can hope for is that in this case the investor might provide constructive feedback on why they don't want to contribute. Some of this you can use, some you simply need to ignore while you keep trying.

All successful businesses were put down at some point when they were starting out, it doesn’t mean you won't succeed.

Reflect on what you’ve learned

Reflect on what you’ve learned

You can learn something from every investor meeting (even the ones that don’t go to plan). Take advice from the people that you meet. If they find a hole in your business plan then make sure that you work on it before your next catch-up. If you can’t answer all of their questions straightaway, go home, do your homework and return more prepared.

During your investment round, you will meet people that you admire and people that you would rather forget, the important thing is that you learn something from every interaction.

Copyright © 2019 IDG Communications, Inc.