Do you know the ins and outs of your start-up? Do you have your goals and ambitions in mind that you are prepared to defend? Do you have an idea of what your key team will look like, and the roles that are required to make your company thrive? If you’re able to do all of this and you’re looking to take your business to the next step, it might be time to consider investments.
You must first begin with the question: “do I need an investor?” More often than not, investors play a vital role in keeping the growth of a business alive, especially when it is first getting up off the ground. And while there might be some initial apprehension in involving outside bodies for fear of losing control, consider these benefits and how the pros may very well outweigh the cons:
It provides a foundation for your start-up idea: The majority of start-ups originate from an initial idea, which then requires funding and a team to turn into a functioning business. Securing investor funds can help you hire the necessary employees, invest in equipment, and have enough funds to sustain daily operations until the business begins to generate income.
It helps the business gain market share: When a start-up comes up with a new idea for a product or service, one of its immediate goals is to capture as much of that respective market as possible. Quickly attracting new customers suggests heavily investing in marketing and sales, which you can accomplish with the help of an investor.
It gives you access to their network: People who invest in startups usually have a well-developed business network. Because the success of your company is in their best interest, they’re likely to help you by connecting you to various people and organizations that may help your start-up.
Convinced? Then here are 3 ways to find investors:
1. ask family and friends
The first people many start-up entrepreneurs consider when they need investors are often their friends and family. Reaching out to people you trust is a clear first step as you already have some sort of established connection on that you can base your request for investment.
Although convincing friends or family to finance your business may seem a straightforward way to secure funds, it’s typically a good idea to treat them like regular investors and properly explain your plans and the risks associated with them. Mixing professional and personal relationships can become a bit complicated, so be sure to properly communicate your processes every step of the way.
2. discover equity financing sources
Equity financing refers to receiving funding from an outside party in exchange for a share of your company. Although giving up a part of the company to someone else may not seem attractive at the startup phase of an organization, it allows you to raise money quickly and use it to get your product or service to the market. There are many places you can find equity financings, such as investment firms, online crowd-funding sites, incubators, accelerator programs, and online groups.
3. find private investors
Private investors are people who look for business opportunities to invest in, usually in exchange for equity. The two main types of private investors are:
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- Venture capitalists: A venture capitalist is an investor who provides companies with capital in exchange for various privileges, whether it be an equity stake, a place on the company’s board of directors, or a percentage of future profits. They can be individuals or venture capital firms and tend to choose startup companies with higher-than-average growth potential.
- Angel investors: An angel investor is usually a person with large amounts of disposable funds who seek promising startup companies to invest in, usually in exchange for equity. As opposed to venture capitalists, who invest with the sole purpose of generating a significant profit from their investment, angel investors are usually more concerned with the organization’s long-term future.
How can Unknown University of Applied Sciences help you find investors?
At Unknown University of Applied Sciences, we make it our mission to make the starting and growing of your business the best experience possible. On top of providing a highly specialized curriculum, connection to our Learning Facilitators and Business Coaches, and access to our incubator-like workspace, you will receive access to our ever-growing network of experts and entrepreneurs, as well as connection to our venture capital funder: Unknown Group. Through this network, get in touch with investors who are looking to fund the next big thing.
