It can be intimidating to find investors. Even the most talented entrepreneurs should expect many potential investors to pass on funding their startup. Thus, it’s important to pursue every possible avenue to attract capital.
Here are seven potential sources to find investors and make your startup a reality.
1. Startup Launch Platforms
There are several companies that provide online communities that connect investors to new businesses. These startup launch platforms provide guidance and mentorship at all phases of getting a startup off the ground. Due founder Murray Newlands recommends platforms like startups.co and Gust as good starting points to find investors efficiently.
2. Angel Networks
The ideal angel investors are ones who take an active role in growing your startup. That means in addition to investing in your company, they will mentor you and introduce you to their networks. In order to find an angel investor, try online networks like Funded.com, Angel Capital Association, and Angel Investment Network. Thousands of angel investors post information on the kinds of investments they want to make on these sites.
3. Crowdfunding Sites
In recent years, crowdfunding sites like Kickstarter, Indiegogo and Peerbackers have provided new companies with the capital they need. The crowdfunding provision in the JOBS Act makes it easier for startups to raise money from the general public, exempting relatively small investment offerings — usually $1 million or less — from registration and compliance regulations.
These sites connect you to a wide range of investors, from the general public who wants to fund the “next big thing” to philanthropists who see the public good in a business idea.
4. Incubators and Accelerators
Startup incubators and accelerators are companies and organizations whose sole purpose is to develop and grow early-stage businesses. The investors involved usually take a more hands-on approach in business operations. They often provide a physical office space, allowing you to network and exchange ideas with other new startups. The mentorship provided at incubators and accelerators helps strengthen your business model and gives you access to the funding to execute your business plan.
The National Business Incubation Association can help you find a local incubator, while accelarators like 500Startups, TechStars, and Ycombinator are worth pursuing.
5. Private Equity Firms
Pitching your startup idea to private equity firms to find investors is probably the most classic path to funding your company. In exchange for a few thousand to millions of dollars, these investors will get equity in your business and plan to sell their stake after a few years to reap a significant profit. Check out Find Venture to search for private equity firms that are looking for new investments.
6. Trade Associations
The US Small Business Association (SBA) recommends contacting industry trade associations to find investors. Your local chamber of commerce can help you find the best one. Also consider investing and venture capital trade associations, such as National Venture Capital Association and the Angel Capital Association.
7. Friends and Family
Finally, don’t forget your personal network. It’s often easier to convince those close to you to invest in your startup, says Tech Republic journalist Conner Forrest. While your friends and family usually won’t be able to advise you on your business plan like experienced investors would, they can provide the initial seed money to get your startup off the ground.
Ready to find investors for your startup? Contact an UpCounsel business formation attorney to help prepare the most attractive business plan possible.