How to find investors for Custom MVP App Development?
Previously, we were writing about Startup launching prices & prototype creation. But your active income might be not enough for the launch. Based on this, we would like to tell you how to find investors today. If you want to find investors for a startup business, you may not be sure where to begin. Not only do you have to find a potential investor, but you have to check they have experience in your industry and pitch your business successfully to them.
It sounds like a lot of hard work, but it doesn’t have to be!
In this article, we’ll be taking a look at some of the ways you can get investment for your startup, and how to find the perfect investor. First of all, let’s look at what an investor can do for your new business, and only after we will find investors for your startup.
Why might I need to find investors for my startup business?
Although it is possible to get money for your new startup by funding it yourself (‘bootstrapping’), some startup founders choose to work alongside an investor.
Companies like WhatsApp, Facebook, Twitter, and Spotify would not have gotten where they are today without a little extra help with funding!
An angel investor or venture capitalist will help provide your startup with the funding you need to buy office space, hire new staff and market your brand.
As well to money, investors can also offer valuable support and advice too. Many investors have built their own businesses from the ground up, meaning that they have the skills to guide you in your startup journey.
You pay for your investor’s time and resources with the equity in your business. They receive a share of your company so that they receive a proportion of your profits when you start earning. They may also ask for a seat on your board, so they are involved in any future decisions.
Find out more about the difference between angel investors and venture capitalists (as well as private equity) on our blog.
Where can I find investment?
The good news is that if you are looking for an investor, there are many places you can go to find the right one, both online and offline.
Here are some of the ways that you can find the investment you need.
Never underestimate the power of networking when it comes to finding funding! Offline networking can be a fantastic way to connect with interested investors, and the great thing is, as it is face-to-face, you can get a feel for any potential investors straightaway.
There are special events like Enterprise Nation that specialize in connecting investors and founders. However, any general networking event can be a brilliant option to reach out to people interested in investing in your specific niche.
Even if you don’t meet the investor of your dreams at one of these networking events, you may meet someone who can introduce you to them!
Through social media
Over 46% of people on Linkedin have over 500 followers [according to BD Academy], making it a great way to find investors for my startup.
You can use LinkedIn to search for specific niches, connect with interesting people, and pitch potential investors an offer that they can’t refuse. Of course, other social media networks like Facebook and Twitter can help find potential investors, but from our experience… LinkedIn is the place to be!
Our top tip is to make sure your LinkedIn profile is up to date and full of your experiences and skills. When you get in touch, investors will want to check your profile out to see if you are worth investing in.
Need a little extra help? Here are fifty of the top investors on LinkedIn.
Through specific startup networks
If you are considering angel investment or venture capital, there are specific networks you can sign up to that will help match you to investors.
Sites like Gust and the Angel Capital Association (ACA) will help put you in touch with investors that may be interested in funding your fledgling business. Do check the terms and conditions before you sign up though, as some networks may charge an introduction fee.
Check out our list section later for some more websites and directories on which you can find investors for a startup business.
By reaching out directly
Getting venture capital funding is generally a more formal process than getting angel investment. Typically, you have to reach out directly to the company with your idea. But the great news is there are many venture capital companies out there, with over 1,000 in the US alone!
You can find both venture capital companies and angel investors in your business niche by searching for them. Alternatively, there are directories available like the National Venture Capital Association (NVCA) and the British Private Equity and Venture Capital Association (BVCA).
When you have found an investor that you think may be interested in your startup, send them an email introducing yourself, and take things from there.
Through crowdfunding sites
It’s an exciting time to operate like a startup, just as there are so many different ways to raise money!
Online fundraising platforms have become incredibly popular over the past few years, giving both startups and investors lots of unique ways to raise and provide capital.
As well as sites where you can raise donations like Kickstarter, there are specialist equity crowdfunding sites like Wefunder and StartEngine. You can use these sites to showcase your product or service to potential investors and gain funding.
The thing to consider with crowdfunding sites is that rather than having one investor supporting your business, you usually end up with several investors, especially if you need a lot of capital. With most of these sites, you nominate a lead investor to sign off on any corporate actions and represent the other investors.
Through a startup accelerator
Although startup accelerators aren’t for everyone, they can be a great way to get to grips with launching a new business in a short amount of time. Many accelerators only take about three months to complete.
As well as getting support and advice on how to get future investment, many accelerator programs feature a demo day where you can pitch your startup to find investors for a startup business. You showcase your product or service and if anyone is interested, they will reach out to you and let you know what to do next.
With startup accelerators, you will end up giving away more equity. You will not only have to give equity to any investors, but also to the accelerator in return for enrolment.
Find out more about startup accelerator programs and how to get involved in a cohort.
Some great lists if you are looking for an investor for your startup business
So far in this article, we have gone through a few of the ways that you can get investment for your business, including a couple of lists.
If you want to get stuck in and start reaching out to potential investors, here are some additional resources that will help you on your investment journey. So, here are where you can find investors for your own business:
Venture capital firms
- Airtable (directory);
- Invest Europe (directory);
- Mustard Seed;
- Octopus Ventures;
- Par Equity;
- Savvy Investor (directory);
- Startups (directory)
- 24 Haymarket;
- Angel Investment Network;
- Canadian Investment Network (directory);
- Golden Seeds;
- Harvard Business School Club;
- Inc (directory);
- Invest UK;
- Invstor (directory);
- Rising Tide Europe;
How do I become a business investor?
Let’s look at the other side of business investing – the people who want to invest their money into a business.
If you have the capital to spare and the experience to help small businesses to grow, you may choose to become an investor yourself.
By exchanging money for equity, you will receive a proportion of the business’s earnings over time. This can be a terrific way of obtaining an income, for a small amount of effort. You also are playing your part in helping brand new businesses achieve their goals.
The great thing is that you don’t necessarily need a lot of capital to invest in a business idea. You can sign up to crowdfunding investment sites like the ones mentioned above for as little as $100.
Our number one recommendation when it comes to investing in a new startup is to do your research. If you find a business you like the sound of, ask yourself the following questions:
- How much money does the startup want?
- How much equity will you receive for your investment?
- Will you receive a seat on the board?
- How big is the potential market?
- What is the founder’s passion level for the startup?
- How well do you get on with the founders? In our experience, this one is incredibly important!
In conclusion – how can you improve your chances of receiving funding?
3 to 6% of all startups receive investment funding – which is not a lot in the grand scheme of things.
If you are keen to get funding to move your business forward, you need to make sure that you have a clear plan in place. This will help you to entice investors on board and stand out amongst the other startups.
Here are some of the ways you can boost your chances of getting investment from an angel investor or venture capitalist:
- Have your financial data readily available. Investors will want to know how much money you have made and how much you will make in the future. What will they get out of investing capital into your business?
- Put together a thorough pitch deck. This is the presentation you will give to potential investors to tell them about your business and what you will do with their investment. Keep it factual, snappy, and innovative!
- Know exactly how much money you need to move the business forward – the more accurate you can be, the better. Also, know how much equity you are genuinely willing to give away. If an investor you really want to work with asks for more than you propose, are you happy to give it to them?
- Look locally. Many investors want to play an active role in the businesses they fund, so they are more likely to invest in founders whom they can talk to face-to-face. The great news is that there are a lot of networking events and local directories of investors you can use.
- Be realistic and honest about your goals. Although it may be tempting to be overly ambitious when trying to get funding, this often backfires. It’s better to work with an investor whose goals genuinely align with yours, even if finding them takes a little longer;
- Remember that you do not necessarily have to get funding from an angel investor or venture capitalist. Some regions and industries offer grants that will give you the money you need without giving away your equity;
- Don’t be afraid to go for it. You may think you are too small to work with a specific investor, but there is no harm in giving it a go. Even if an investor declines your opportunity, they may give you helpful feedback or point you in the direction of other potential investors.
Whatever you do, keep trying. You may need to find investors for a startup business before you find one that is the perfect match for your startup.
You don’t have to start with getting funding either. Some businesses begin with bootstrapping and then move on to the funding option at a later date.
Whatever option you choose when it comes to funding, we wish you the best of luck in your investor search for your own startup!
Need some support looking for investors for your startup business?
You are launched has been working alongside lean startups looking for funding since 2016.
Our team of specialists has the expertise and experience needed to help you get capital for your business. If you are unsure how to reach out to investors or how much equity to offer, we will work with you to crunch the numbers.
Get in touch with us today to see how we can help your startup grow to the next level.