Raising the right amount of capital from the correct investor is perhaps one of the most crucial tasks for an entrepreneur. Analogous to matrimony, while finding the right investor would ensure the longevity of the enterprise, a wrong match may provide to be completely detrimental for your business.
The task becomes further cumbersome, for it is the natural instinct of an entrepreneur to work on the concept and strengthen the platform, instead of polishing their sales skills for securing investment.
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Explore investors with similar wavelength
While looking for the perfect match, you should look for the investor sharing the same vision as yours. Go through the enterprises they have invested in before and understand their reasons behind doing the same. If an investor places weightage on the people behind the startup and is familiar with the product that your startup is creating, the solutions you are offering or the technology you are deploying, then there are higher chances of long-term partnership.
There is a common notion that entrepreneurs cannot be picky while seeking investments, especially with the startup funding drying up. However, several startups have been successful in closing the rounds of funding, raising the desired investment. It is because they believed in the product they were creating and refused to settle down for anything less.
Furthermore, you may also want to explore the investors who would be able to relate directly with the solutions you are providing. They may either be operating in the adjacent segment or may have a soft spot for the industry you are enterprising to venture into.
Prove your caliber by bootstrapping
Regardless of whether you are aiming for angel investment or venture capital, you need to have a functioning model and traction details, in order to arrest the attention of interested buyers. For the same reason, you need to invest the resources you currently possess, in order to yield the desired numbers.
By bootstrapping, you display your own commitment towards the startup and the idea behind it. Besides, since bootstrapping is difficult, it sets the culture of the organization right. When startups have bootstrapped in the beginning, they remain grounded even after receiving the funding and continue to focus on the solutions they are providing.
Even if you raise money, always think of reaching to positive cash flow to remove dependence on investors. Investors themselves have constraints, reflected in their mandates. Be aware that they may not be able to deposit cash in your bank account, even after they have signed term sheet with the investee and paid some portion of the total committed amount to the investee.
Grow your network, ask for recommendations
Investors are bombarded with requests for pitch meeting, majority of which goes unnoticed. In order to receive their undivided attention, you would need a stronger network. Make it a point to attend startup events and interact with the investors, before asking for a pitch meeting.
Grow your own personal network, interact with alumni and mentors. Don’t let that be a superficial interaction, but discuss ideas, give and receive feedback and develop the relationship further. Investors are more likely to invest in people than simply in ideas. Hence, let people work for your startup, simply by developing stronger relations. Explore the profile of desired investors on LinkedIn; should you have the common connection, ask for a recommendation. You can take this offline as well by personally asking for a recommendation with a particular investor or a capital firm.
With investment, also seek future growth
An investor doesn’t bring in just the money on-board. You should typically be looking for an investor who holds the promise for future growth. As you pursue investment for your venture, you would come across people who will inspire you to think out of the box, discuss the strategy to scale up and simply ask the right questions. Moreover, look for investors, who, with their skill set, network and understanding of the knowledge, are able to take your idea to the next level. Never stop looking for new investors even though you have cash in the bank. Additionally, avoid opting for investors who may give you the desired capital, but are in just for the smooth ride and offer no value addition of any sorts.
Prepare your pitch accordingly!
Once you have screened the investors and have an idea as to the investor you are looking for, it is important to pitch accordingly. Refine your pitch on the basis of the key information your suitable investor would typically by interested in. Sieve through your network and continue to attend the events to meet the investor you have in mind
Remember. This is just a sample.
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