As a start-up entrepreneur looking to take the next step, it is important to be aware of large investment deals in your niche so you can incorporate them into your pitch. They are now opening up to new ideas and ready to allow entrepreneurs to become catalysts for change in the entrepreneurial environment.
These days, investors are not afraid to take risks and test new waters.
If you are just starting a business, it may take you 4 to 6 months to finance your company. Investors may differ depending on who has their resources, capabilities, and inspiration. You can choose from a list of investors to establish and improve based on your strategy, capital requirements, and your preference based on the size of your enterprise.
As a founder, you also need to call on whether or not your startup has reached the appropriate stage to raise funds. It depends on the current state of your business and the results you want to achieve in the next 12-18 months.
Investors play a key role as one of the key players in the funding process. Their expertise and involvement is the deciding factor for funded venture success. That’s why it’s so important that you know about the different types of investors so you can understand who to choose and how to approach the right one.
Different types of Investors for Startups
Personal investors refer to a network of your family, friends, and acquaintances who can provide a basic round of funding. This funding category is relevant when you are in the early stages of your startup, covering feasibility testing costs and experimenting with your brand. These types of funds can help you to a limited extent, after which you will need to factor in other resources.
Paperwork is another factor to consider when investing in individual investors. We recommend that you seek the help of an attorney to guide you and your investors through the documentation.
Angel investors are one of the most popular investors. They are high-net-worth individuals who provide funding in exchange for a stake in startup equity. They can be anyone from a wealthy friend, relative, or acquaintance.
Angel Investors also known as Business Angels, Private Investors, or Angel Funders, look for the right match for the entrepreneur and their team rather than just business profitability. They can replace funding support with their industry expertise. If an entrepreneur-business angel relationship fits right in it has enormous potential.
If Angel Investor is looking for entrepreneurs, they are well-connected with Venture Capitalists, which finances startups with long-term growth potential. VCs can be investment banks, affluent funds, or other financial institutions. Venture capital can find the right way for personal funds who want to grow their prospective successful businesses. Venture capitalists, like angel investors, can provide strategic inputs and help sharpen your marketing, financing, and operational decisions.
Others (Peer-to-peer lenders-)
Peer-to-peer lending is a direct loan tool that borrowers connect with those who have funds. Higher interest rates compared to other investment options have motivated investors. Borrowers seek a P2P loan when financial institutions and other funding avenues are not favorable.
Websites like Faircent and Finzy make P2P debt easier. In this process, the investor makes a bid for the borrower’s loan requirements and the borrower can choose to accept or reject it. There is a maximum limit on how much you can lend through this mode.
How to approach investors successfully
Once you begin your journey to fundraising, you may find it to be a lengthy process. Many of the investors you meet may not finalize the deal. It calls for patience, confidence, and stability. The process becomes much smoother and more efficient once the contract is established.
We hope these tips for contacting an investor will get you closer to your goal faster. It is important to remember these for maximum effect.
A first impression, the best impression
Unforgettably pitch yourself! It is important to make the right first impression on the investor. Well-known investors receive multiple pitches for which they do not devote significant time. That’s why when you first email them, make sure your content is attractive so that it arouses their interest.
Leave them spellbound
Finding the best investors and the search for investors who want the right business to invest in, will enable business cycles to develop. If your business goals resonate with the investor and you demonstrate your long-term vision with passion, it will attract the right investor’s attention. They need to anticipate the prospects and benefits and enter correctly.
When raising capital, you may want to “probably” practice your pitch with investors and wait until your pitch feels organic and ready. These types of investors are not necessarily bad, but they are investors who do not worry about getting your pitch-perfect. Be strategic when choosing who and when to talk to and try to make the best use of your opportunities to get it right.