How these six strategies help to attract growth capital
Raising funds from investors is not an easy task. Investors are often flooded with many investment proposals and unless they find your business idea compelling, it’s difficult to get their attention. As an entrepreneur, it falls on you to make them understand what value your company is creating, the business growth it promises and where you stand in the industry.
Entrepreneurs have to approach investors with well-defined strategies through which they plan to accomplish the business goals. A clear strategy is what will help them get an investor on board.
Here are six strategies that will help you attract growth capital from investors.
1) Build a Strong Product
Private equity, venture capital and seed capital investors always look for businesses that has a strong product and gives value to the customers. Before approaching an investor, entrepreneurs need to make sure their product is good and is loved by customers. Once the product is ready, the focus should be on getting results, in terms of increasing the user base or revenue. Even the best product is of no value to investors, if it doesn’t have users, because it is ultimately users who will generate revenue.
If you approach investors with a strong product and results, they are more likely to invest in your business.
2) Prepare for the Pitch
When presenting your idea to an investor focus on the founders, their experience and the values your company stands by. Prepare an appealing and comprehensive presentation that is visually intimidating and does not have too much text. Investors have already seen thousands of pitches and your pitch needs to stand out. It’s always good to take the help of a professional business consultant to craft a visually appealing presentation.
Investors will also ask tough questions, so always go prepared. Make a list of all the potential questions the investor can ask you and have their answers ready. This will let you confidently respond to the questions, making them realize you understand the entire dynamics of the business. Investors like to bet on entrepreneurs who are committed and passionate about their business.
3) Network and Share Your Business Ideas
One of the easiest ways to raise funding is by networking with people. Networking events are a great opportunity for entrepreneurs to explain their business ideas to potential investors. Entrepreneurs can also connect with industry leaders and get their feedback on the product or services they offer.
In principle, keep networking and sharing your business idea with everyone you meet. Some entrepreneurs have landed their co-founders just by getting on a call with a friend and sharing the idea. You never know who might join you as an investor.
4) Safeguard Investor Interests
Some investors prefer not to invest in companies that don’t give them immediate rewards. Giving investors guaranteed returns in terms of fixed annual dividends can motivate them to fund your business. This gives them both, short-term and long-term returns.
You should also be transparent in sharing your existing business strategy and future goals. As an investor, they become stakeholders and want to know how their funds will be utilized and what is the business growth plan. If you get an investor on board, make sure to keep them updated with monthly and quarterly growth numbers. This will establish trust and also open a window for future investment opportunities from them.
5) Connect with Government Organizations
Many government organizations provide growth capital to local businesses or have resources that can help entrepreneurs raise funds. The work of these government organizations is to fuel economic growth by helping value-generating businesses get funding. You should approach these government organizations and tap into their resources to attract investors.
6) Start with a Single Investor
The idea of getting too many investors on board is intimidating but challenging. Instead, focus on finding a key investor who is well-versed in your industry. Make a list of these cornerstone investors and start approaching them with your idea. Once you have a key investor on board, your company’s credibility will increase and it will become easier to attract future investments. You will also benefit from their industry experience.
Entrepreneurs usually have too many things on their plate and getting all these strategies in place can be daunting. Taking the help of experienced business consultants will help prepare a compelling investment proposal and also let you connect with potential investors.
We are seasoned in helping entrepreneurs secure growth capital from investors. If you are looking to attract investors, reach out to us and we’ll help you grow your business.