Are you pondering how to find investors for your small business? The right investors can provide you with the funds, the know-how, and the network you need to launch a successful company. They can also help you grow your business into its full potential. But what exactly does it mean to find investors? What do you need to know about it? This article provides the basics of business investment.
How to Find Investors: What is a Business Investment?
A business investment is a financial investment in a business. Business investments include the following:
- Startup capital: The funds needed to launch a new business
- Purchase of stocks: The acquisition of shares in a company
- Pre-IPO shares: The acquisition of a considerable portion of shares. This occurs before the shares appear on public exchange listings.
How Investors Can Help a Business
- Access to capital: Investors can secure access to capital. These funds can be made available within a short period. Most businesses value this support the most.
- Business strategies: Clearly, an investment in your company has financial consequences for the investor. Therefore, the latter is usually willing to help you strategize. By helping you, investors also help themselves. By promoting you, they promote themselves. For a new entrepreneur who lacks business experience, this guidance is invaluable.
- Mentorship: An investor can also be an excellent advisor, and could even be your greatest mentors.
- Networking: Investors usually have extensive experience in the business world. Therefore, they have many connections. This may help you find employees, clients, and business partners.
- Creating a good image: Having an investor also benefits your image. A business that has investors looks more credible and successful. Consequently, new investors may also become interested in your company.
Pros of Getting an Investor
As mentioned, there are many advantages to getting an investor. They can provide you with capital and quick access to funds. Moreover, you can receive business advice, connections, innovative ideas, and a good image. An investor can help you grow your business at a faster rate.
Cons of Getting an Investor
Despite the pros, there can also be cons of having investors. The main disadvantage is that as you accept capital, you allow others to have a say in your business. If your investors are granted a share in the company, then the company will no longer be yours alone. This means you will not have the same freedom to do as you please. In fact, you and your investors may have different views on strategies, goals, and other aspects. Similarly, the profits will be split between you and your investors.
Are you interested in borrowing a small business loan before taking on additional investors? You can click here to read our complete guide on how to get a small business loan in the US.
Where Can I Find Investors for My Business?
At this point, you may wonder how to find investors. It is, in fact, not as difficult as one might think. You can find investors in various places, such as:
- Networking events: Attending events is a fantastic way to meet potential investors. Whether it be networking events or other occasions, being visible is certainly important.
- Social media: These days, social media is no longer just a community for teenagers. In fact, these platforms are some of the best tools to increase your company’s visibility. Start by creating pages and ads for your business. You could also ask friends and family members to share your content. Contacting an influencer is another good option.
- Online fundraising platforms: You can also use an online fundraising platform. There you can quickly meet many potential investors.
- Startup accelerator programs: Applying for a startup acceleration program is a good idea too. Most of these programs invite investors to their training or events.
- E-mails: Sometimes, sending an e-mail can be enough to find support. Why not send several investors a friendly e-mail along with your business plan?
- Share your product or service: You could also share your product or service for free. This can be done by handing out free products with your company logo.
What Other Kinds of Startup Business Fundings Are There?
- A bank loan: You can get a business acquisition loan or bank loan to get the funding you need to start your business. Almost 40% of startups use loans.
- Grants: Applying for grants is another option. However, a grant is a smaller amount. Therefore, it may not suffice.
- Family and friends: You can borrow money from family and friends to launch your business. Since they know you well, they are likely to understand and believe in your business idea. According to Entrepreneur.com, 38% of startups receive this kind of support.
- Bootstrapping: Bootstrapping is when you found your startup without any financial assistance. Instead, you invest your own money into the business. If you have enough savings, bootstrapping can be an ideal option. After all, not owing anybody money is a great way to start a business. Another benefit is that you also keep 100% ownership of the company. Personal funds finance around 30% of startups.
What is an Angel Investor?
An angel investor is a private investor. This person usually provides entrepreneurs with significant financial support. This constitutes around 10% of the investor’s own portfolio. In exchange, the investor receives ownership equity in the company. Angel investors mostly invest in startups.
The Bottom Line
If you are considering a startup, an investor may be excellent for you. They can provide you with a lot of useful support and catapult your business to the next level. At the very least, the possibility is definitely worth considering.