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My name is Ivan Kroshnyi. I am a businessman, co-owner of a group of companies, and co-founder of Flexible Investment Solution investment fund. Young teams often reach out to me asking how to find investors. In today’s article, I am going to explore different ways to find investors, the benefits, and drawbacks of each option, and offer some tips for it.
Venture and investment funds as a major stage in the company’s evolution
Investing in startups is a high-risk investment. Some investment funds are willing to take risks for the sake of big profit in the future.
TIPS. Venture capital funds are often reluctant to invest in young or growing businesses. That being said, this does not mean that you should abandon this option altogether. Create a solid business plan and commercial proposal and send them around. There is a good chance that they will spark an interest of the fund’s investors.
Business angels are a popular answer to the question: “How to find investors?” Funds and individuals specializing in investing in startups and young businesses act as business angels. For example, one of the first investors of Steve Jobs and Steve Wozniak’s joint venture was business angel Richard Kramlich who invested $22.5 thousand.
TIPS. You have to be truly passionate about the idea to spark investors’ interest. They should see that you have an interesting and promising product to offer. Make sure to carefully prepare for the presentation of your startup, and be able to have an answer ready to all possible objections or questions the potential investor may have. Check their background and reputation, and formalize all terms and conditions once you reach an agreement.
Networking: How to find a good investor
Networking is an excellent way to find an investor, build business relationships and improve your reputation.
TIPS. Networking is how I typically find my business partners and intriguing investment projects. And I know how important it is to create a good first impression. It is about the way you look, speak and behave. Put on a brave face, focus on the subject matter, and don’t forget to leave your business card. As far as the contact card is concerned, add the key information about each person to it. It can be not only the date of their birth but also hobbies and even phobias. This information will help make business relationships stronger and even turn them into friendships.
Family, friends, and relatives are often those people young entrepreneurs turn to.
Drawbacks of having a relative or friend invest in your project
TIPS. If you intend to partner up with close people who will act as investors, carefully weigh up the pros and cons. Approach business relationships with them the same way as you would with business partners. Make sure to sign an agreement that would govern your relationship, areas of responsibility, dividends, etc. That way you can protect yourself, your business, and your relationship.
Now you know how to find investors. Whatever you choose, you should be able to communicate your idea to a potential partner and demonstrate the prospect, originality and relevance of your product or service. Take into account all the little things and you will definitely find the investor you are looking for.
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