If you are running a business, chances are that at some point you will need to fund upgrades to your equipment, additions to the payroll, new inventory, or some other such expense. While going to the bank for a loan may be the most straightforward approach to getting the funds that you need, it isn’t always the best route, nor the fastest.
An angel investor can take many forms. There are those who are at arm’s length, which is to say that you aren’t going to have to throw a big innovation seminar to present your ideas, nor are you going to have to network at a big isponsor event. You won’t have to do these things, because your angel investor is in your own backyard, figuratively speaking. It could be a family member – a parent, sibling, wealthy aunt, or a distant cousin who shares your interests. It may be a friend, former co-worker, or neighbor. The reason why we mention this is because many business owners are not ashamed to tout their business sense and their innovative ideas at a high tech seminar, while among other business owners and hopeful start-ups. Yet, those same professionals will shy away from talk about work at all in front of the people most likely to invest in them. You don’t have to come out and ask for money, but it certainly doesn’t hurt to talk about the new and exciting things happening with the business. It doesn’t hurt to mention the growth potential and the earnings that your investors stand to earn on their money. Plant the seed, at least.
If that doesn’t work, then you can reach out to the domains and networks of angel investors. These are the individuals who openly seek new businesses that show great potential. They are looking to make a bit of profit on their investments, but really, they just want to invest in something- or someone who just needs a bit of support to become something great. Keep in mind, angel investors are typically looking for three things:
- A strong understanding of how to run a business
- An innovative idea
- Some way in which they can add value
Remember, the latter is often as important as the first two. Angel investors are often people who have enjoyed their own successes in business, and they likely do have a lot of valuable information and connections to offer, so be open to dealing with them on more than one level.
Top Tips for Fundraising for Your Start-Up
Building a business is difficult, and it generally requires a great deal more capital than you having on hand. That means that you will have to seek it from banking institutions, angel investors, or venture capitalists. In either case, you are going to have to put together a good presentation to convince the entity to invest in your idea.
- Assemble a Great Team Not only will this give you the chance to practice pitching your idea (after all, you’re likely going to have to sell the idea to those you hope to recruit to your top spots), the more experience and know-how your team has, the more apt the investors will be to take a chance on you. Don’t know where to start? Consider attending iFestival, and do a bit of meeting and greeting. That sort of networking can lead you to the talent that you seek for your start-up.
- Have a Thorough Plan You can be certain that any gaps in your business plan will be quickly discovered by potential investors. After all, these people didn’t make their money being foolish. They will very likely have a great deal of business sense and many years of working experience backing them when they read through your plan.
- Remain Steadfast You will likely have to attend many events – invention seminars, innovathons, etc. – and do many internet searches before you find the private investors most likely to put money into your venture. It is not easy to fundraise. Know that at the start and be prepared to work through the many obstacles that may present themselves along the way.
- Realize the Perks There may be times when accepting less-than-stellar financial terms will make sense. Of course, you don’t want to strap your start-up with payment terms that are nearly impossible to meet, but you also have to recognize the perks that come with working with certain investors. When that person or entity has- and is willing to impart valuable information and connections, then it may be worthwhile to be a bit more lenient in the negotiations, because ultimately your bottom line may be more positively impacted by the knowledge than by the better terms.