Angel investors and venture capitalists can help you secure funding for your business. But how do you attract investors for your startup? Considering the depressing statistic that nine out of 10 startups fail , you might be wondering what makes people even want to start a startup or to invest in an unknown entity in the first place. Behind every successful startup is a risk-taking investor who dared to jump on board at an early stage when the stakes were higher, willing to take a gamble with the hopes of funding the next Zuckerberg.
An explosive growth in technology startups has inspired a sizable boom in venture capital investing. According to Tom Villante, angel investor, founder, and CEO of FinTech payments company, YapStone , in the capital markets for emerging startups may be running into some headwinds.
There is still some funding available, but the competition for it is increasingly fierce. Venture capitalists are a form of private sector finance dedicated to helping new companies establish themselves and grow. They typically seek out opportunities in growing markets, such as technology, FinTech, IT and Biotech. Venture capitalists are far more likely to invest in an unknown entity than a bank because the payout could potentially and enormously outweigh the risk.
VCs will, therefore, provide all the cash that your company needs, but often at a high price, which usually involves a profitable exit strategy, or demanding enough shares in your company to influence decision making. Angel investors are individuals who personally invest in startup companies to help them grow.
As the substantial rewards and payouts became apparent, angels soon spread their wings to other fields and become known as business angels. But the involvement of angels plays a pivotal role in entrepreneurial success in more ways than merely financial. Startups can gain a lot more than a simple cash injection from the right angel investor, including industry expertise, inside knowledge of customers and competitors, personal network contacts and potential partnerships.
But whether your business wants to solicit the help of an angel investor or a venture capitalist, here are a few key pointers to keep in mind that just might help you stand out in the sea of startup competition and attract investment for your business:. Not entirely impossible, but extremely unlikely. Angel investor, Villante, affirms:. So remember to be passionate above all and let it shine through in your proposal. In fact, entrepreneurial passion directly affects how much capital is a startup receives.
When Villante was angel investing in the late 90s, he found himself with five companies on his hands; none of which was particularly excelling over the rest.
YapStone , the online payment portal, showed the greatest potential, so Villante decided it was time to go all-in and become CEO, withdrawing his interests from the other companies. The fact that you have chosen to be an entrepreneur says that you have passion. So before you condemn yourself to a life of lament over the brilliant entrepreneur you should have been; why not get started right now? You may be lucky enough to attract an early angel for your cause, or have generous friends or a large credit card balance, but whatever you can do to help your company prove its value is going to help.
Learn to cultivate its value and be innovative to attract investment early on. Think about successful startups like Facebook, Uber, and PayPal, who have never spent a lot of money on advertising, but instead focused on resources to build value into their products.
Venture capitalists above all look for a strong and balanced management team, flexible and skilled enough to face the challenges that may come their way. Your business plan, although a key asset, is not as important as your people. Most successful companies are founded on great teams; a visionary, passionate leader with a global perspective, a talented technician with the skills to turn that vision into a reality, and a sales person to tailor the product to meet market demands.
If your startup is missing a key position, then it will be far less attractive to investors. Make sure you highlight the talent of your team, state of development and future goals in a concise executive summary that cover these key topics.
Be sure to master a few different versions of your pitch tailored to the appropriate audience. Your micro pitch should be 30 seconds at networking events and around 20 minutes for potential investors.
This is your chance to really sell yourself, your beliefs, your passion and your company to investors. Hone your storytelling skills and get them inspired. So be open to answering them, as securing funding could be crucial to bringing your startup dream to life.
Accounting Finances Financial Solutions Funding. Finance Human Resources Marketing Technology. Get a Free Business Report Card! Get My Report Card. How can I establish a relationship with bankers and other investors in my community to secure a business loan?
Social Login Log in with LinkedIn. Login with Your Account Email. Create an Account First Name. Enter your email address and we'll send you an email with a link to reset your password.More...