What approach have you used to gain investor interest? Why was it so successful?
These answers are provided by Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most successful young entrepreneurs. YEC members represent nearly every industry, generate billions of dollars in revenue each year and have created tens of thousands of jobs. Learn more at yec.co.
1. Know Every Detail of Your Business
You need to know every detail of your business and have it prepared when you walk through the door. We approached investors with an idea that could scale, had the data to back it up and a great team already on board. It worked because we knew all the details of our business and had a clear picture of where we wanted to take it.
2. Growth Over Profit
Investors know you can turn the profit when you’re ready, and if you have money it’s hard to prove what you actually did. That is why they value growth over profit and prefer to work with companies who can grow 10x predictably. Speak to proven predictable growth and differentiation strategy and you’ll be sure to get funds. This is the approach that works for me very well.
3. Show Results
If you can, show results. For instance, even if you don’t have any paying customers yet if a few people have tested your product or service, show off what your business was able to do for them. Being able to see how your product or service works for people in real life helps investors see your value.
4. Start With an Informal Meeting
Investment isn’t just a transaction — you’re bringing stakeholders on board that will be with you (or not) for the long haul. It’s important to assess your relationship and see if your interests are aligned. I prefer doing an informal meeting first to build rapport, then mention a few high-level details about the company and the offer, then set up a follow up a formal meeting to discuss the deal.
5. Long-Term Vision
The most important technique I’ve found when attempting to gain the interest of potential investors is providing a vision of the long term. If you demonstrate that you plan on developing capital in a project with serious longevity, it will make it much easier for them to justify making an investment. Otherwise, they may suspect you of attempting to “take the money and run.”
6. Prove it on Paper
Anytime we’ve sought investor interest for a business loan or a line of credit, we’ve made it a point to highlight our data and revenue on a year-over-year basis. It’s important to show any potential lender or investor your scalability and what you’ve done so far, on paper. In my experience as a business owner, absolutely nothing speaks louder than real numbers and data to back up what you’re saying.
7. Apply for Awards
One way to attract investors is to apply for awards. Specifically, I have applied for awards such as the following: Inc5000, Utah 100, and Inner City 100. These awards not only boost the ethos of your site, but they also put you on a list of reputable companies. Investors will often go through these award lists and contact those companies. It’s a fast and easy way to get exposure!
– Shu Saito, Godai Soaps
8. Develop Genuine Relationships
Our first venture capital check came more than five years after I first met one of the firm’s partners. We worked on several projects together and, over time, developed a close professional and personal relationship. When the time came to raise capital for ZipBooks, it was a natural fit — we knew and trusted each other and wanted to keep working together.