How to Land Investors with These Sweet Tips
In the financial world, the catchphrase to beat is “Always Be Closing.” In the startup and small business world, it’s “Always Be Fundraising.”
These days, instead of relying on one huge seed round to land investors, smart companies are breaking it down into several funding phases. The ones that make it in this crazy world are also the ones that diversify where they get that cash.
This is partly because VCs in Ontario and elsewhere are becoming more and more cautious about what they invest in, making it harder to land investors and get all the cash you need in a single seed round.
You also have to focus on staggering your investors (and really all your sources of funding) to get into the 10% of startups and new businesses that make it.
Here, we’ll tell you everything you need to know about landing investors for your company, and how to diversify your sources of funding. This way, you’ll be landing several sweet deals, not just one.
1. Know When To Look For Investors
You already know that in the business world, image, branding, and your name are everything.
So when you’re trying to land investors, make sure they at least already know your name. Especially when you’re looking for angel investors or the serious sharks, you need to determine if right now is the best time to do so.
Look at local options in and around Ontario, but also make sure you’re casting a wider net.
Since the average startup raises about $328,500 from angel investors, jumping the gun and squandering this opportunity would be a total failure. Don’t blow it by being over-eager.
You’re much more likely to land investors after you’ve invested some of your own money (or the small amount of capital you do have) into your marketing budget.
Host an event with an open bar, invite the press and the major players, and even consider live streaming the event. That way, when you meet with a potential VC, they’ll remember you as the guys who threw that epic event last month.
2. Pick Your Players
You might think that any source of funding is a good one, but you don’t want to send the message that your startup is so desperate for cash that you’re willing to work with anyone who throws you a few bucks.
When it comes to securing small business or startup financing in Canada, to play the game, you have to know who else is on the court.
But your pitch meeting is a lot more likely to be successful if you really do your research and know the names of between 40-50 VCs and angel investors you know would be a killer funding option for your startup or business.
So, how do you find these people? Narrow down people interested in your sector on funding sites (see below) and then get in touch with other entrepreneurs.
They can tell you from experience which investors are worth working with, and which ones are just all talk.
Then, it’s spreadsheet time! Don’t just go for surface-level facts about these people. Make notes about their interests, families, and social lives. Bring up any connections you have.
3. Get On AngelList
If you’re not sure what type of investor would be the best fit for you, you need to check out this awesome site.
Instead of just letting you pitch to investors, here investors can “pitch” to you to. Make a profile on this platform as soon as you finish reading this list.
You won’t just be able to tell potential investors about your company and product, you’ll also be able to tell them about your team.
Instead of wasting time trying to find investors who might be interested in throwing cash your way, this platform connects you with investors who are already into your specific type of business.
Once you’ve created your profile, share, share, and share again. Why? Because the more followers you have, the more likely your brand’s profile is to show up in other investors’ feeds.
Finally, get personal. If someone expresses interest in your startup, or even in a startup that’s similar to your own, reach out right away.
Showing you’ve got hustle, and that you’re constantly monitoring your potential sources of funding, is a great way to land investors.
4. Don’t Forget About Crowdfunding
Sure, most of your marketing budget should be spent on hunting for those big fish. Still, if you overlook sites like Indiegogo, Kickstarter, and Peerbackers, you’re missing out.
Why? Because crowdfunding gives you access to all different types of investors. College students who like your idea, people who want to get in on a product they think will blow up, even wealthy investors combing these sites for ideas.
Sites like OurCrowd connect you directly with accredited investors who are looking to help your startup get off the ground.
See crowdfunding as the first step to being able to land investors that are bigger fish. This quick cash will give you more money to play around with advertising and courting the sharks.
5. Tailor Your Introductions – It’s Worth The Time
We know: you might think you don’t really have the time to send out hundreds of personalized emails.
But when you’re trying to land investors, especially ones that you don’t have a connection to, do you really think copy-paste is the way to go?
Nobody, especially the kind of investors that have money to play around with, are going to respond to an intro that you’ve sent to 50 other people.
Instead, focus on that list of 40-50 we talked about earlier. Pitch to these investors as individuals. If you’ve done your research, you already know they’re going to be into your idea. What they’re looking for are the people who can make it happen.
Try something short and sweet, like:
“Hey, I’m not one to send out cold emails, but your reputation speaks for itself. I hear all the time about how you helped (Company 1) and (Startup 2) to break in, and I had to introduce myself.”
Also, when trying to land investors, never ask for cash straight up in the first email. It’s all about making them intrigued. They’ll respect a startup founder that has the guts to reach out to big names in the industry without a connection. That’s drive.
6. What Are Friends (And Family) For?
It’s time to get real for a second: even if you’ve done all of the steps listed above, perfectly, you still may not find an angel investor or a VC.
Unfortunately, that’s the way it goes sometimes.
But we already know you’re not one to quit. Not getting funding right away doesn’t mean your startup is destined for failure. It just means you’ll have to invest more in your marketing strategy, and that you need to find other ways of getting cash to make it happen.
Whether you’re just looking for initial seed money, or if you feel like you need cash in a hurry, there’s nothing wrong with turning to the people closest to you.
Still, to avoid burning any bridges you need to proceed with caution.
- Come to them with a plan: Just because you know these people doesn’t mean you can afford to get sloppy in your pitch. Treat these meetings and pitches as you would ones you give to potential sharks. Bring all your paperwork and slides, talk to them about your strategies for growth, and show them what their potential investment could make them.
- Ask for the lowest amount you can: Nobody wants to feel like they’re being manipulated into forking over huge amounts of cash because you’re manipulating a family connection. Instead, be upfront that you’re asking them for the minimum amount you need. Plus, they’ll be a lot more likely to invest that way.
- Get it in writing: Having a signed promissory note that talks about your repayment plan is crucial. Not just for you and your family, but so you don’t get into legal trouble down the road.
When it comes to landing investors, there’s one thing you’ll need more of than anything else: patience.
Quality funding doesn’t happen overnight. Also, it’s not likely to come from a single source.
If you put these 6 tips and steps into practice, you’re going to wind up with a good amount of capital to play around with. Or, you might just land a partnership with the VC or the Angel Investor of your dreams!