John Grifonetti Shares the Eight Best Ways to Attract Investors to Your Company
Founding a startup company is a demanding task. You will not only be responsible for researching and testing your product or service, but you will also be responsible for finding investors to help get your ideas off the ground.
Sitting passively and waiting for investors to knock on your door will not produce any results. Companies that want investors to fund their activities need to take concrete steps to ensure that they receive attention from the right investors at the right time.
John Grifonetti shares the top eight ways that your startup can attract investors, pointing out some of the difficulties that can occur along the way and how to overcome them.
Networking is an essential business activity at every stage. Always be open to networking with a new person or company. If you can attend business events, whether virtually or in person, be sure to go. No matter where you meet people, have a business card ready and be willing to give the short version of your pitch at all times.
It is possible to meet investors in unexpected places, such as social situations outside work. Always be on the lookout for these opportunities.
2. Understand Your Industry
When you have a startup company, it is easy to develop tunnel vision and focus only on your idea. It is necessary to fully understand the industry and how your company fits into it to grow your business. Every entrepreneur believes that they have the best and most unique idea, but many do not research and determine which ideas have worked in the past or come to dismal failure.
3. Make Realistic Revenue Projections
Angel investors are too intelligent to believe overly optimistic revenue projections. It is better to make a realistic projection of your revenue in your pitch for an angel investor and then work to exceed those expectations.
To make revenue projections, you will need to take an honest look at your balance sheet. Examine your money coming in and going out. Estimate how long it will take for your major product to become commercially viable and how much money you need from the investor to make your idea come to life.
4. Understand Your Business Plan
This may seem like obvious advice, but too many startup business owners don’t have their business plans memorized. Nothing makes a startup company look worse than stammering over a reasonable question from an angel investor. Spend time studying your business plan and make sure that it is thoroughly ingrained in your mind. You will need to be able to answer questions about your financials or your value proposition without hesitation.
You will also need to immediately answer the question of what sets your business apart from the crowd. Expressing what makes your company unique will make the investor believe in your idea and make them more likely to put their money into your company.
5. Start Close to Home
When you are beginning to fund your company, it is a good idea to start with your friends and family. Small investments can add up quickly. If you can offer them an excellent yearly return on their money, you may be able to convince friends and family members that you deserve a chance. Get your operations going and your revenues flowing as soon as you can. If you already have some money in the bank, you are much more likely to receive funding from other sources.
6. Don’t Inflate Your Valuation
Investors can see through efforts to inflate a company’s valuation. You need to make sure that your company’s valuation is honest and complete. Make sure that your valuation is in line with similar companies that have recently received funding.
7. Go for the Right Investors
Ideally, you will want to find an investor that is a partner in your activities and a source of funding. Ensure that you have a good working relationship with your investor where they believe in you and let you run your own business without micromanaging. Investors should also have the skills to help you manage your business properly if asked to help.
8. Watch Out for Consultants
Many funding consultants are good, but watch out for predatory consultants. Unscrupulous consultants look at your company and see a significant source of funding that they can claim as their own. If you choose to use a funding consultant, make sure that you check their reviews and testimonials first.
Nurturing Your Startup Company
John Grifonetti believes that startup companies can attract the right investors if they follow these eight tips. Understanding how to attract investors is a skill that will serve you well throughout your business’s lifespan. When you take your time to choose an investor for your startup, you will help ensure your future success.