How many times have you found yourself in a business meeting where the investor says something like, “I really believe in your product and I would love to invest if only your company wasn’t so risky.” What does that mean?
It means that they are not willing to take on investment with as much risk. So what do you do now? You need to find someone else! There is no reason why your business should be stuck without investors because of one person’s fear of taking risks. Here are some tips for finding equity investments for your startup company.
7 Steps to Follow to Raise Equity Investments for Your Business
So you’ve got an excellent idea for your business but no funding? Check out these steps on how to raise equity investments for your business;
1. Come Up with a Funding Strategy
In order to receive funding, you have to know what kind of investment success looks like for your company. What are some essential considerations before seeking capital? Ask yourself these questions:
- What percentage of my business am I willing to give up in return for funds?
- Am I looking solely for the money or mentorship as well (or a mix)?
In any case, if there is a specific plan that ties together how and where this new influx will be utilized, then it’s more likely investors would take notice and want an ownership stake.
2. Prepare Your Business Detail
Your business cannot exist in your head when you present to investors. Now is the time (if you haven’t already) to research, document, and project all of this information about potential customers on hand for prospective investors.
They will want market data around numbers like how many users/customers there are as well as projected revenue forecasts and budgets.
3. Find Equity Investors
Entrepreneurs who are unable to get financing from banks will often turn to equity investors. Equity investments for small businesses can come in various forms, but there is no “standard” investment option available. This is because every business has different needs and goals that need funding.
There are various sources of equity investments that include;
Angel investors are wealthy individuals who invest in budding entrepreneurs and start-ups. Angel investors often have experience as an entrepreneur themselves, bringing them the skills needed to build a successful company alongside their initial investment of money into it.
Crowdfunding is the web’s most potent tool for young and independent entrepreneurs. Crowdfunding is important because;
- It can provide seed money and capital when starting out in business.
- It allows people with passion projects outside their line of work access to investors who might not have been available otherwise.
- It helps solve problems by engaging supporters from around the world as well as local communities.
- And finally, but probably most importantly -it gives backers something tangible they’re proud to support.
Venture capital is a form of equity financing that typically requires more money from investors in the long run. Venture capitalists, or VCs as they are also known, invest much larger sums than angel investors and often provide loans to make up for this difference in cost. Ventures with high growth potential will most likely be funded by venture capitalists who hope to reap significant rewards when it comes time for sale or floatation on the stock market.
Gone are the days where you move door to door, office to office, looking for someone to invest in your idea. With everything digital, you can also find equity investors on online platforms such as Capyx, Capbase, and Fairmint.
These platforms link investors and entrepreneurs, meanwhile Fairmint not only links investors with entrepreneurs together, but also assists those in need of equity information and guidance – from investment advice to risk management for numbers.
4. Prepare Your Pitch
The presentation is the most crucial part of getting funding. You’ll want to make investors an offer they can’t refuse, and that requires immaculately prepared presentations with your best business detail. What’s more compelling than a story? Angel Investors love stories! Get feedback from friends, colleagues, and contacts who are friendly towards you – it’ll not only help perfect your pitch but also give them insights into what makes people invest in companies like yours.
5. Organize Meetings
To increase your chances of landing an investor, schedule as many meetings with potential investors as you can. You never know what could happen at the next meeting!
The key to raising equity for your business is reaching out and talking to everyone who might be interested in investing, and that includes other entrepreneurs like yourself. Take advantage of all opportunities because a great one won’t come along every day.
6. Negotiate Partnership Details
Many people don’t think about themselves when they start their business. Your first priority is to make sure you have a stake in the company, and it isn’t just the investor who has an opportunity for success if things go well. To ensure this happens, use a lawyer with experience working on these types of agreements, so all variables are considered.
7. Close the Deal and Celebrate Your Partnership
After all the hard work, it’s time to celebrate. You can do this by celebrating your new business partner in style with a gift that will remind them of their investment and commitment long after they’ve moved on. After all, without these partners, there would be no celebration.