While you don’t require money to come up with an exceptional business idea, you need capital to grow and keep the business afloat. Depending on your requirements, there are a variety of sources of funding available. From instant loans from Finance27 to personal savings to angel investors, there are several avenues you can take in terms of funding your startup.
However, in order to procure funds for your business, you are likely to form an alliance with your lender or investor. Finding a suitable investment party is crucial for the future of your business. In this post, we summarizing some ways to ensure you’re involving the right investors for your startup.
1- Share Your Vision
You need an investor who shares your business vision. You could have an excellent product idea, but it could still fail without the right execution.
Therefore, while approaching investors, talk about your vision for the business as a whole rather than just focusing on your product. An ideal investor should believe in your vision and long-term potential.
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2- Repeat Rounds of Investment
Involving an investor implies relinquishing your control to a certain degree. So, this means every time you bring in new investors for the next round of funding, you are further diluting your control over the business.
In order to prevent diminished control, look for investors who are known for participating in future rounds of investment. This will not only secure your control over the business but it’s also a lot less expensive and time-consuming.
You have to look beyond the present when considering an investor. Will their involvement encourage or discourage participation from investors in the next round of investment?
Getting an investor on board might be beneficial right now, but if it dissuades other influential investors to associate with your venture then it’s not worth it. You need someone with a good reputation in the industry and who can convince other reputable investors to join in.
4- Cultural Fit
Every venture has a unique culture and brand. If an investor doesn’t necessarily agree with your company culture, it will be a point of contention. An investor is likely to make decisions that represent your culture and brand, make sure you are in agreement with them.
5- Effortless Working Relationship
This goes without saying, you require someone who’s easy to work with. An investor could bring in indispensable experience or connections to the table, but it serves no purpose if they’re impossible to get along with.
Apart from you, other parties such as vendors, other investors and so on will also work with this investor. Getting an obnoxious investor involved is not a feasible move in the long term.
6- Investor’s Intent
It is difficult to determine a person’s intent, but you have to try your best to understand an investor’s main motive. Do they want your business to flourish and grow? Or do they want to push you out of your own venture?
Even though there’s no set formula to know someone’s intention, learn to read people, do your research and above all, trust your gut.
7- Investor’s Influence
An influential investor can do much more for your startup than a certain amount of funding. The right connections and relationships with other investors, industry leaders and media can prove to be highly valuable for your business.
8- Investor’s Contribution
An investor doesn’t just contribute funds for your business. In order to build a new business from the ground up, the right investors will act as mentors and share their industry experience and connections.
When you’re approaching an investor, be clear regarding what you require from them apart from funding. It’s an added bonus if they have prior experience with working for a similar venture.
In conclusion, choosing the right investors is crucial for the future of your business. Carefully consider your options, diligently do your research and don’t let money be the sole deciding factor.