Getting investments and seed capital is arguably one of the hardest things about starting a small business or tech startup. Finding the right investors is already hard enough, but then you’d also need to convince them that your startup is worth investing in. If you’re unsure where to go or who to turn to get that much-needed seed capital, here are some ways you can get the money to at least establish your startup.
Crowdfunding Campaigns
Getting funding from people online is one effective way you can get some seed capital. Platforms like Kickstarter, GoFundMe, and even Patreon are some of the most commonly used crowdfunding platforms for small businesses and independent business owners. A common tactic to get more people interested in your startup is by offering them something in return, such as a discount, a shout-out or even a share of the profits if they’re willing to invest long-term in your startup. It’s also one way to get noticed by more investors.
When it comes to crowdfunding, your pitch is essential. You want to hook people and get them not only to donate money in your seed stage but also to patronize your business once you’ve got it on its feet. Crowdfunding is one way you can gauge outside interest in your startup, especially towards a specific target audience.
Personal Connections
At first, it might seem unprofessional and even embarrassing to ask for funding from your personal connections, like family members and friends. Still, the truth is, most startups do get their funding from their personal circles. You can try asking them for a loan or asking them to invest directly in your startup. You might even want to tailor your business to their particular wants and needs, so they’d be more interested in investing or promise them some part of the shares, so they’ll feel like they’re getting the most out of their money. Or better yet, if they’re business owners themselves, ask for their advice and support.
Most importantly, remain transparent with them about what you plan to do with their money. The worst thing you can do is be dishonest about how much you really need and where that money is going. If you manage to get your friends and family’s support, financial and otherwise, you might be able to get lifetime investors.
Other than family and friends, finding referrals is another way to take advantage of your personal connections. If you know anyone or have contacts that have gone through the same thing, ask them if they’d be willing to refer you and your business to investors. If you don’t have those kinds of connections just yet, attend networking events or find a local community of similar business owners and investors. Building connections is essential to any business, and especially in finding investments.
Private Investors
In general, there are two kinds of investors small startups should look out for: angel investors and venture capitalists. Angel investors are the ideal kind of investors you want to hook. They’re individuals or companies with a high net worth who invest in startups with the expectation of getting a share of your profits and a high return on investment (ROI). Most angel investors use their personal funds to invest and usually do so out of their personal interest. They can quite literally be your startup’s savior. Nowadays, you can find and reach angel investors through the internet, and then it’s all a matter of pitching your startup and convincing them to invest.
Venture capitalists, meanwhile, work for a firm or a fund and don’t get their money from their personal coffers. They prefer to invest in businesses that are a little more established rather than businesses that are quite literally just starting out. Still, both angel investors and venture capitalists are known to invest significant and perhaps even excessive funds towards startups. Not without a price — like all investors, they’ll want to have a share, although the amount or percentage will depend on the kind of investors.
Looking for private investors is all about connections and networking. Suppose you can get a referral, even better. Don’t be afraid to reach out to any big names in the industry, either. As long as you’ve got an excellent pitch and great promise, you just might get the attention and interest of some of the most important names in the industry.
PR Agencies
If marketing is an entirely new world to you, you can get help from a technology PR agency. They’ll be able to market your business or startup effectively, and they’ll know how to get it noticed by investors and potential consumers. There are no worries if you don’t have a pitch ready or don’t know how to pitch your business. A PR agency will do it for you or at least prepare you for it. Of course, PR itself is a significant investment on your part, as you’re investing in another company for the sake of your own, but the possibility of a high ROI should be enough to tide you over and convince you to take a chance.
Conclusion
Winning investors is all about networking and having confidence in your own startup. After all, if you wouldn’t buy your own product, how could you expect everyone else to? Finding investors might require a bit of investing on your part as well, whether you’re investing your money, your time, or your effort. Still, the right investor and opportunity can bring not only capital but a higher chance of ROI.