The Ten Best Ways To Attract Investors
Article from Brent Gleeson – Forbes Magazine
As an entrepreneur, the biggest challenge you might face right out of the gate is raising money for the first time. It’s not easy to get investors to put their money and their faith in you, but it’s definitely possible. Here are some tips….
Network, network, network. You can never meet enough people. If you have opportunities to go to business events, conferences or mixers, you need to go. And, don’t just look in the obvious places.
Know your industry. Every entrepreneur thinks their idea is the best and most unique. Many focus too much on their own concept and not what has actually worked or failed in the past.
Do your homework! No hockey sticks. Don’t show dramatic initial revenue growth that’s off-the-charts. That is referred to as the “hockey stick.” Make realistic projections and then fight to exceed them. Smart angel investors won’t be impressed by unrealistic numbers.
Know your business plan inside and out. You need to be able to answer any question about your business, whether it’s about your financials or value proposition, without looking at a piece of paper. This business is your baby. Know it inside and out. And know the answer to, “What makes your business different?”
Start with friends and family. Offer them a decent 12-month return on their money and use the money to get started. Get operations moving and get revenues flowing in if you can. Raising a larger round is much easier with some money in the bank.
Back up your valuation. Why is your company worth what you say it is worth? Are there comparable valuations of recently funded companies? Do not inflate your valuation. Investors see right through that.
Pick the right investor. It is crucial to make sure you find the right investor. Don’t just immediately take money because it’s being offered. You don’t want an investor calling you five times a day. You want a partner that believes in you and will let you run your business. You also want an investor that can help and advise the business properly.
Beware of funding consultants. There are definitely some good ones out there, but there are a lot of bad ones too. These consultants see you as an opportunity and they want a large retainer, an equity stake in your company, or both. Be aware of these people and check their credentials. Make sure you find one of the good ones if you decide to use one.
Choose your board of advisors wisely. Investors look for a strong team around you that believes in you. Make sure these advisors are successful, and ask them to be available to speak with potential angel investors.
Sell yourself and don’t give up control. An angel investor is generally not investing in the business or the idea. They are investing in you. Convince them that you are the right person to do the job, and gain their trust. This will make them less likely to ask for control of the company.
Raising angel capital is a tough process. You will fail more than you will succeed. Stay persistent and if you believe in your business, it will happen.
