How to Find Investors for Your Business Idea: Full Guide for Startups

When you are trying to understand how to raise money for a business startup, it's difficult to find the point to start with. Let us show you this point. The first thing you need to remember is that the usual scheme of money raising consists of different phases, which are called rounds. Here are the common steps of a startup fundraising:

The first round is a seed round. Seed round or seed capital is the sum which you have before addressing investors. In plain English, this is your money which you can spend on your startup or money of your family and friends who believe in you and are willing to help. If you have enough money and do not want to attract any other people and their capital, then you can bootstrap. Bootstrapping is a process of a startup development when a founder relies on his own money or on the money from the profit of this particular startup. It means that no third-party investors are going to be involved.

Series A implies you to meet first investors and get some money from them. Series B supposes you to have some significant results of your startup as a proof of your business viability. The next series requires even more significant results from you.

There are several ways for you to get funded. It also connected with the type of investors you want to work with. Moreover, you can appeal different investors during different phases of money raising. Here are the types of investors you need to know about, how to find investors for your startup and contact them:

Angel Investor is one person who is willing to invest in your enterprise. These people usually don't give much money and they can make high-risk investments with fewer profit guarantees. It's better to contact Angel investors during the seed session and session A.

How to get angel investors? You can find Angel investors on conferences concerning the related industry. Or, you can also find them online. The most popular platforms where you can arrange your first meeting with angel investors are Angellist, Gust or Angel Investment Network. All these platforms work in a pretty same way. Ordinary people along with individual businessmen are looking for promising startups to help them during their early stages.

Venture Capital is a form of financing which companies or large funds provide startups with. An investment fund is an establishment which performs collective investment on behalf of a group of people or companies who entrusted their money to this fund. A venture capitalist is a person who has right to manage fund money and who invests this money in different projects.

How to start crowdfunding? There are a lot of various platforms which use different conditions of collaboration. For instance, GoFundMe is a donation-based organization which can help you raise fundraising for a business startup without any rewards from your side. Another option is Kickstarter, where you set a reward for being funded. You will have to give it only if your startup raised needed amount of money. Indiegogo platform uses another scheme. Here you need to pay up to 9% fee to be funded. You can raise needed sum or not, still, you'll have to pay.

Venture capitalists are usually very demanding, they invest in reliable small or early-staged firms (startups) or vice versa, in dying companies with the intent to sell it to the highest bidder. Venture capitalists don't invest in a risky business. That is why it is so difficult to get their support, especially in the early stages of a startup development.

How to find venture capitalists? The best way to have a meeting with potential investors of this type is to be introduced by one of them. Of course, you can contact them directly but you have very little chances to be invited to a real meeting. VCs can find you by themselves if you already started gaining profit.

It is clear that the absolute newbies have no links to such companies. That's why there's another option for you. It's to contact a startup incubator company.

Business Incubators are the establishments which help young startups and companies to launch and get funded. First of all, these companies can provide you with seed capital. Second of all, they teach you. BIs can organize lectures, invite famous businessmen to meetings and share the insights with you. And, of course, they can introduce you to the Vs after a while.

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Where to find business incubator? One of the most famous companies incubators is Ycombinator. This company has raised more than 800 startups. They worked with Reddit, Airbnb, Dropbox and many others. Twice a year the company chooses the most interesting startups and invest $120K in them. After that, the chosen ones move to Silicon Valley for 3 months. During this time, Ycombinator organizers teach startup owners how to manage all business issues. After this period, startups meet investors who are willing to find their gold mine.

Crowdfunding is a form of money raising with the help of various platforms which offers different conditions. There are some platforms where your startup can get donations from people free of charge, without any reward. This approach can really work if your startup is somehow connected with a charity or any other noble purpose. The other platforms allow you to raise money in exchange for different bonuses from you.

ICO is a new hype in the investment world. ICO is used instead of usual percentage in the company which you offer in order to get funding. You sell this cryptocurrency to your investors. The system is easy but at first, you need to create ICO, which means you will need to find an expert in web and mobile app development services for this task. The easier way is to create not coins themselves but tokens based on existing cryptocurrencies.

You can find thousands of various platforms which may help you with funding and investors on the Internet. No matter what option you choose, you need to be fully equipped and ready for all sorts of questions. Let's consider what things you need to prepare yourself before getting a meeting with investors.

Only in a case with friends and relatives, you can describe your idea with the help of hands and your fiery speech. With all others, you will have to show your substantive preparations to persuade everyone that you are a serious businessman with a great idea. For the initial stage, you'll need only two things to be ready. It's a prototype and a Pitch Deck.

Tip. To protect your idea from being copied you need to indicate 'Confidential and Proprietary. Copyright (c) by...' and the name of your company in the square brackets. And a phrase 'All Rights Reserved' on the first page of your presentation.

Even if you have done everything perfectly, stakeholders can refuse to invest in you. There can be several reasons for that. Explore them in order to avoid these pitfalls.

The fundraising process is long and tiring. Don't expect it to be easy. The biggest part of this road you'll have to walk alone. Still, you can always rely on us. Write us if you want to impress your investors with a really high-class prototype or if you are ready to entrust us the whole project.

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