1. Family and Friends
Family and friends are generally the first ones approached with the idea of being a startup investor. This is usually done in the very early stages of a business, before it has been proven successful. In essence, they are being asked to invest in an idea and, more importantly, in you. Take this seriously and approach family and friends in a professional manner with a planned-out pitch. Decide beforehand what type of investment you are looking for from them: a loan or an investment.
2. Social media
Social media is a dominating force in today’s technology-driven, fast-paced society. If used correctly, social media can be a powerful tool for finding a startup investor. It is a very cost-efficient option for developing and organically growing your business in the public eye. Exposure to people that you might not have otherwise been able to reach is made attainable. Facebook, Twitter, Instagram, and LinkedIn are all popular social media platforms that a potential startup investor may spend time on.
3. Private Investors
There are two main types of private investors that may be willing to be a startup investor. While they both provide capital for a business in exchange for shares or equity in the company, there are some differences between the two.
• Funds the startup in the early stages of development.
• Tends to invest in companies that they are familiar with.
• Invests with their own finances.
• Typically fund businesses that are somewhat established and have shown growth potential.
• Tend to invest in industries that are likely to yield a high return.
• Employees of venture capital firms invest other people’s money.
Online fundraising platforms, such as Kickstarter, LendingClub, GoFundMe, and Indiegogo are becoming increasingly popular ways for a business to find a startup investor. Through online campaigns, a large group of people come together to raise money for a business. This avenue is usually taken while the business is in the early stages of development and before banks or private investors are approached. In addition to raising funds, these online platforms are effective at getting your business on people’s radar. Typically, there are four types of crowdfunding that are used to find a startup investor:
• Donation: Money is donated to a company for nothing in return
• Debt: Money is loaned and must be paid back with interest within a certain timeframe
• Reward: Money is given in exchange for a reward. Rewards may vary depending on the size of the donation made.
• Equity: Money is given in exchange for a portion of the business
A large part of success in business, especially when looking for a startup investor, depends on who you know and who you can make connections with. Make yourself and your business visible to potential investors. This can be done by taking every opportunity available to build mutually beneficial relationships with those around you.
A startup investor can take many forms and be found in a wide variety of places. By taking the time to research all possible options and choose the one take that works best for your business, you are helping to secure to the success of your business. Visit our website to know more.