How to find investors for your startup business
Launching a startup business is a significant accomplishment. It takes lots of drive, commitment, and courage to transition your innovative idea into a legitimate business. But it is no secret that even the most passionate and brilliant entrepreneurs will face greater challenges if their businesses do not have proper financial support. Exploring how to find investors for your startup business, and more precisely, attracting ones that will have the expertise to take your company to the next level, is critical in your startup’s early stages to set yourself up for long-term success.
Where to find investors for your startup business
There are different types of investors for startups, each with its own set of perks. It is important when looking for investors for your startup business to recognize what stage your startup is currently in, how much funding you require, and if your company is what a particular investor will be looking to invest in.
Here we will look at three types of equity financing — receiving funding in exchange for a share of your company.
- Family and Friends
This avenue can be really attractive as the conditions of investment are typically more lenient and advantageous. There are many things to consider when approaching family and friends, but two of the most important are deciding whether your agreement will be a loan or an investment, and ensuring the terms of your agreement are clear.
For example, will they expect interest paid on the loan? If it is an investment, what percentage of future profits will they receive? Your terms must be clear and in writing so there is no confusion or problems down the road.
- Angel Investors
Angel investors are people with significant disposable funds who seek promising investment opportunities. Typically, investment in your startup is exchanged for equity in your business. The difference between angel investors for startups and venture capitalists is they usually are not only interested in generating a return on their investment but are also invested in your company’s long-term future.
Angel investors not only can provide funding, but offer years of industry expertise that can be of equal value when working to grow and scale your business. Well-established angel networks like the Peterborough Region Angel Network located in Peterborough, Ontario, invest in promising startup businesses and care about helping companies achieve success.
- Venture Capitalists
Venture capitalists are investors who provide businesses capital in exchange for benefits such as company equity, a seat on your board of directors, or a percentage of future profits. Venture capitalists can either be individuals or large firms and they gravitate toward startups with above-average growth potential.
How to get investors for your startup
With an overview of where to begin looking for investment opportunities, you may be wondering how to attract investors for startups and get them to invest.
The answer is networking.
Networking helps your startup business grow, and by attending industry events and forming connections you will gain knowledge about the best investment opportunities. Even if you do not network directly with investors, meeting other business owners and leaders opens up doors to get an introduction with an investor they may have in their network.
An effective way to increase your networking and connect with investors is through a startup incubator. Startup incubators host events and workshops, are closely connected with angel networks and offer knowledge and tips on how to successfully give a business pitch and secure investor funding.
Innovation Cluster Peterborough and the Kawarthas offers year-round networking and mentorship that helps startups find and attract investors.
To learn more, visit https://www.innovationcluster.ca/.
