How to Ask Investors for Funding
Persuading someone to invest in your business involves doing your research and putting together a pitch.3 min read
2. How to Attract Investors for Your New Business
Wondering how to ask investors for funding? You're not alone. Persuading someone to invest in your business involves doing your research and putting together a pitch, so you'll need to tell a compelling story and share what's unique about your products or services.
How to Ask Investors for Funding
Unfortunately, many would-be entrepreneurs fail at attracting investors to help get their businesses off the ground. Before pitching your idea to an investor, you need to do some basic research. Using a pitch template for PowerPoint can help get you started, but there a variety of tools online at your disposal that can help you put together a professional-looking presentation.
Research potential investors carefully. You need to have a good idea of what types of businesses they care about so you can tailor your pitch to them. Investors want to see that you can back up your business claims, so have a solid business plan prepared, complete with financial projects so investors can look over the information.
Start your pitch by telling a compelling story to engage your audience right out of the gate. The story should address whatever problem your business helps to solve in the current market. Share what is interesting or unique about your idea and how it solves real-world issues. It's also important to be realistic about how your product or service will break into the market. Think about your rollout plan strategically and share this information during your pitch.
A good way to show how much value you add to the marketplace is to include a PowerPoint slide that compares your business to its competitors. Include a list of competitors, along with relevant features or benefits along the top, then tick the boxes for each company offering that particular service. When your company ticks all the boxes compared to your competitors, potential investors can literally see what you're offering.
Here are a few helpful tips to keep in mind during your pitch:
- Keep your pitch concise and easy for the average person to understand.
- Stay away from industry buzzwords the investors may not be familiar with.
- Don't ramble. You need to get to the point quickly.
- Be specific about your products, services, and pricing.
- Emphasize why the market needs your business.
- Build some credibility by sharing your relevant experience.
- Show your projected revenue over the next few years.
- Detail how much money is already being invested in the company, including who the current investors are and how much more money you need to reach the next stage.
- If seeking a large amount of investment capital, let investors know what your exit strategy is should the business fail.
Remember, investors invest in people before the actual ideas, so you want to impress them. Let them know why you're the right person to lead the company and what you can offer them in return.
How to Attract Investors for Your New Business
Most entrepreneurs start out by bootstrapping, which is financing their endeavors through any available personal funds. Bootstrapping involves draining your savings account, taking out a home equity line of credit, or maxing out your credit cards. Unfortunately, your personal funds only go so far, and you find yourself having to look for outside investments to keep your business idea going.
Investors tend to like companies with proven track records. Since you're just starting out, attracting investors will be a little tricky considering you don't have an existing track record. A good place to start is to research potential investors and find those whose beliefs, missions, and interests align with yours. Finding a like-minded investor drastically increases your chances of success.
You can also attract investors by having a strong social media presence. Build up your web presence on multiple social media platforms, as well as your website.
Those just starting out should seek out lesser-known investors who frequently support small businesses. Only when your company is well established should you chase those bigger investors.
Oftentimes, your first pitch doesn't yield the results you were hoping for, but don't give up hope. Keep working and continue trying to attract investors. Learn from your failed pitches, and focus on the positive aspects of the pitch to use the next time around.
If you need help asking investors for funding, post your job on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.