For every entrepreneur, the success of his business is important. There will be times when your own efforts will no longer be enough and it will be time to move to another level. To achieve this, you will need help.
It is at this point when we stop and think “how do I find investors for my business?”. Doing so is vitally important, as investments will give your business a new impetus, you will be able to develop new ideas and you will be able to reach more people. To do this, you will need to find the right set of investors.
Finding investors for your business will not be an easy task. However, giving up is not an option. If you follow the following tips, you can have a reliable guide that will lead you to find that much-needed funding for your business.
Family and friends.
Family and friends are the first people we turn to in order to finance or promote a business venture. In English, they are known as “the triple F” (Friends-Family-Fools), i.e. friends, family and relatives; the latter being those who are willing to invest in our business even if the relationship with them is not so close.
The positive side of this type of investor is that they almost always contribute with blind faith to the success of the project, and without asking for reimbursement. The disadvantage is that the amount they can contribute is in most cases very small, so you will need an injection of external capital to be able to finance your business.
When looking for investors, you may find the ideal source if you go to your family and friends first. They are the ones who have probably heard your ideas more than once, and they may be just as excited as you are. So it’s these people who will be most likely to be supportive.
This is the most commonly used source of funding for most people. However, it should be noted that bank loans or credits are mainly intended for well thought out projects, with high levels of preparation and structuring. Such projects should include realistic objectives with a short or medium term goal to be achieved, as well as a solvency plan.
The advantage of this type of financing is that you will not have to wait a long time to get the resources you need. The difficult part is to elaborate a project with a solid planning structure, and also to show it to the bank in a safe and attractive way so that they can feel encouraged to finance your project.
You must also take into account the economic situation of the area where you live, since these influence the bank’s receptivity when granting credits. On a more personal level, it is important that you have a good reputation with the bank where you will apply for financing.
This method of financing has become increasingly popular over time. It consists of requesting funding through a collective by making yourself known on the Internet.
Interested parties invest a certain amount in a ranking and thus you get the funding. Currently there are many crowdfunding platforms, and those who invest in your business will receive in return a compensation either through material or advertising in your business, among others.
There are many entrepreneurs who are making use of this method of financing, whether they have something already established and want to expand their production or sales field, or if you have not yet started and are looking for funds to start your business.
Some have even asked their investors to pay for the product before it is made, and once it is manufactured in a chain, they deliver the item directly to the investors’ doorstep. In other words, it would be an advance online purchase. However, it should also be noted that this type of financing does not rely on a continuous injection of funds or advance planning. Much will depend on how you position yourself online and how you are perceived by Internet users.
A business angel is a person who believes in the product or service you want to undertake, and with his economic support will help you to start the project.
This person will not only provide the capital, but will help you to place your product or service using his portfolio of contacts, his experience and advice.
So this type of investment can be ideal for that venture you want to carry out. However, it is possible that the business angel may want to intervene too much in the development of your company.
You should be very clear about your goals and state them clearly to the investor, this will avoid misunderstandings and you will be able to make the most of this financing option.
Contests, awards and accelerators.
There are large companies that have taken the initiative to invest in small businesses and ventures when the product or service they offer is of interest to them.
These companies seek to attract new talent through cash prizes or by letting them use their accelerators to boost the project.
Entrepreneurs have the opportunity to participate in the contests offered by the company, and if they win, they can get a cash prize (depending on the conditions pre-established by the company).
Venture accelerators are also a good option, as they allow a group of entrepreneurs to enter and be part of their program; which may include training, coaching, access to mentors, contact with investors and possible cash funding for the best entrepreneur. On the negative side, the investment may vary according to the interests and policies of the company.
Occasionally, the state or public bodies associated with it propose aid aimed especially at entrepreneurs, aimed at the launch of a project, the payment of social security, reforms or digitization of the activity. As it is a public call, anyone can participate, and usually does not require repayment. The main problem is that financing can be slow and be very attentive to the official bulletins announcing these types of financing.
This article is also available in Spanish.