It’s all a numbers game
As a startup, the biggest challenge you face at the beginning is raising money for the first time. As a founder, it’s normal to assume that you should accept funding from wherever you can find it. But while looking for investment, there are so many factors to consider — from an investor’s financial motivations to whether their values align with your company’s values. It is important to establish a good relationship with the investors and find someone that fits the best with your vision.
Attracting the best-fitting investor for your business is not an easy task. Raising money in the startup world is a numbers game. The 100:1 ratio is a key statistic to remember. The average investor invests in one company out of every one hundred, so your chances of receiving an investment from any investor is about 1%. Additionally, cashflow (mis)management has caused 82% of startups to fail. But don’t be discouraged! Although it all seems like an impossible task, Storm4 has come up with a little guide to help you find the best-fitting investors for your business. Ready?
3 Top Tips for finding best fitting investors for your business
Research potential investors, and research them DEEPLY
Basically, create a list of potential investors you would like to speak to. Then, have a deep dive into the “why”. Why these investors? Are they in your sector? Any potential conflicts of interest?
- Make sure to look for investors with a portfolio similar to your company. Why? Because you can maximize this relationship, since the investor has seen a lot of “like” companies and knows what to expect.
- Don’t be afraid to ask Questions! Prospective investors will be checking up on you, and you have every right to do the same with them. This step is very important in terms of your vision: in order to make sure the investors you’re speaking with match your business, both sides need to have a clear understanding of the main goals and future milestones. This includes operational and financial objectives. Ask difficult questions related to possible scenarios.
- Don’t be afraid to ask for references. It’s important to hear people’s opinions about the person you may potentially be working with. So, make sure you’re going through this process very carefully. Lastly, focus on the person first, and the company second. At the end of the day, you’re dealing with real people. Having a great venture company invest in your business is important. But having a trustworthy and easy-to-work-with person at the forefront is more important.
- Try to handle as much of the negotiation process as possible by yourself. The best way to get to know someone is how they handle a deal process, and it can be a great opportunity to understand with whom you’ll be working with.
Have a realistic business plan
When creating your business pitch, try to put yourself in the shoes of the investor. What will convince you to invest in a startup? Prepare a realistic business plan that can be achieved with clear, measurable steps. Present it in a way that the investors understand they’re not only funding the company but also, you. Show them what you and your company are capable of, and that you’re reliable enough to make this plan a reality. Make it clear that this is your business, and that you’re still in control of it. The investor should not only bring funds but be a strategic partner in accelerating your mission. Additionally, it’s always good to have a Plan B prepared just in case. That will help you with any questions that the investors might have, as first and foremost they look for someone reliable and realistic. In that way, if the option doesn’t pan out as you were hoping to, another solid option is waiting on the side.
Spend a lot of time working on your business plan, as it will be crucial for your success rate. Don’t rush things, and if necessary, don’t be afraid to reach out for the opinion of others to prepare a pitch that will accelerate the efforts of securing investment!
Know your industry and know it well
It might seem like a no-brainer, but knowing your industry is one of the best tips that will help you with finding the best investors for your business. Having a deeper understanding of what is going on in the market will help you with preparing your pitch, as it will be easier to identify the key characteristics that make you different from other companies that are already working in that space. Immersing yourself with market knowledge will also help you with looking for potential investors. Have a look at companies “similar” to yours and check out who invested in them – which is something that we already mentioned in the first point above. Being interested in the market and following what is happening can be also beneficial for building up your networks and community of like-minded people.
It is important to note that our article is not a full-proof guide when it comes to pitching and finding the best investors, but it is certainly a starting point with tips that will hopefully help you with the process. Raising investment is never an easy task, as you need to be prepared for many different things. But despite the stress, the process doesn’t have to be a struggle all the way. We hope that our guide will serve you as a starter, to wrap your head around the different ways you can find the best fitting investors for your GreenTech.
With such a fast accelerating market like GreenTech, there will be many opportunities for growth for startups and scaleups. Because of the specifics of it, finding the right talent to fill in roles might pose a challenge for some. That’s where Storm4 comes in! We pride ourselves on working with the best candidates in the market, so don’t hesitate to reach out to us and our expert consultants.