If you’re trying to get a startup going, you’ll have noticed something: you need money. But how exactly do you woo potential investors, the very people who will finance your venture? Let’s take a look.
Risk Your Own Money
The best way to attract business loans is to make sure that you convince investors that you’re serious about your business. You can have all the passion in the world, but if you’re not in the hole yourself for a significant amount of money, it can hurt your case. Investors want to see that you’re serious about your own enterprise. If you’re serious about it, they’ll feel more inclined to be serious about it too. There’s plenty of ways you can start bootstrapping your business. You can take a job to pay for it and build it on the evenings and weekends. You can dip into your own savings or remortgage your house. You can even go to the bank of mum and dad and ask them for a loan or investment.
Create Prototypes And Betas
Businesses that have little more than an idea are unlikely to attract new investment. Why? Because investors want to see that businesses have a working product before they invest. The best way to convince investors to take part in your venture is to build something that they can see and try out themselves. With an actual product in hand, investors will see that your company is far more than just an idea – it has a feasible product too. Prototypes have a similar effect on investors to risking your own money. They suggest that you’re serious about your business and are willing to invest time and money into it. Betas and prototypes also demonstrate that you have the skill to build the actual product, which again helps investors.
Connect On A Personal Level
Your relationship with your investors should go well beyond the financial transaction. Investors ideally will be involved in all stages of the business as it gets off the ground. They’ll be there to make sure that new entrepreneurs are obeying the basic rules of business. And they’ll need to offer a guiding hand when it comes to making sure the company makes the best deals. But most importantly, there needs to be a connection on a personal level. Investors and entrepreneurs who share the same vision of the future work better together.
Getting the funding your business needs can take a lot of time and effort. Startup companies often spend between 50 and 70 percent of their time chasing investors for new money. Sometimes this process can be quick. But for the average startup, lead times are in the three to six-month range. Thus, it’s best to be prepared for an extended period of time at the beginning where you won’t have a huge amount of money. If you find you’re still waiting for money after a year or more, take that as a signal that your business isn’t investable. It might just be that the combined experience of the market doesn’t believe you have a product that will sell.