Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Attracting Investors for Your Business
Start It Up | iamibrahim | Feb 11, 2021
Some businesses are not a great fit for angel or venture capital funding
What if your startup is a good candidate for investment, but you’re having trouble getting meetings and convincing investors that your company is the next big thing?
Here are 11 tips I learned from a millionaire entrepreneur who gave a talk as part of the Young Entrepreneur Council’s webinar series. These tips will help you to attract the eye of an angel investor or a VC, and make your business a more appealing investment.
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Try the “soft sell” via networking
Networking is usually the number one tip for new entrepreneurs for good reason — networking allows you to pitch your startup in a less formal, more organic fashion.
“If you’ve been building a great business, getting out and networking within the local startup and investing community can be a great way to meet investors,” recommends Diana Goodwin of AquaMobile Swim School. “Most of my meetings with investors developed by being out at an event and mentioning my business.”
See: #FFCON21 Brings Canada’s Tech Hub to the Web for 3 Days of Fintech Insights, Business Building May 11-13
While there is something of an art to the organic soft-sell, when done right it can make investors more likely to consider your business. After all, you’re not just pitching your idea — you’re also strategically relying on the social capital built through the networking process to influence their investment decision.
2. Show results first
It can be a difficult cycle to break: You need money to get customers, but you need customers to get money.
A catch-22 this may be, but it’s worth making an effort to acquire customers or users before you approach an investor, rather than seeking funds first and customers second. “Make a plan to get your first customer that doesn’t depend on huge outside investment,” says John Rood of Next Step Test Preparation.
Why is this so important? “Particularly if you are a first-time entrepreneur, it will be much easier to get investments on good terms (particularly from non-institutional investors) if you have some traction first,” he explains.
Investors want proof that your idea is going to work, and nothing proves this better than having real, paying customers.
3. Pitch a return on investment
While investors may believe in your business, their investment is ultimately a means to an end — they need to make money on their investment. So, it’s important to highlight what they will personally gain from investing in your business.
See: The Success of Canada’s Recovery: Are Investors Ready to Spend?
“Whether you’re pitching an angel, VC, or your rich uncle, it’s imperative to show how you’re going to get them a return,” explains Nick Braun of PetInsuranceQuotes.com.
“It’s tempting to focus on yourself and your business model, but ultimately, investors want to know what’s in it for them. The best way to stand out and get interest is to clearly illustrate how and when you will get them a return.”
4. Take advantage of the online fundraising market
“With the popularity of fundraising platforms like AngelList, Gust, and CircleUp, you are no longer restricted to only being able to raise money if you’re in Silicon Valley,” says Fan Bi of Blank Label. “If your business has best-in-class metrics for your industry, you will be able to raise money.”
His advice? “Post your business to one of these sites highlighting your best metrics, and find investors on the platform covering your industry.”
5. Avoid following the crowd
To attract the attention of an investor, make sure your product solves a real problem. Too many entrepreneurs simply try to reinvent the wheel, so avoid being one of them.
See: Startup advice is confusing. Here’s how to make sense of 6 common contradictions
“As Jeff Hammerbacher, Founder and Chief Scientist of Cloudera, put it, ‘The best minds of my generation are thinking about how to make people click ads. That sucks.’” says Aidan Cunniffe of Dropsource. “I’ve found more investors than I expected who were tired of funding ‘me-too’ apps and incremental advances.”
“Build something first, whatever business you’re in,” adds Jay Johnson of Small Lot Wine. “Do it as scrappy as you can, and get users and revenue. There are many ways to do this thinking outside the box.”
“As the old proverb goes: Fortune favors the bold,” Aidan says, and advises other entrepreneurs to try to “do something wonderful.”
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