Raising capital for a startup business is an incredibly challenging task. After all, you are asking investors to believe in something that has no proven track record or real evidence of success. However, the process is even more difficult if you do not approach it correctly.
1. Plans and Projections
Prepare a solid business plan that outlines what the projected growth of the business will look like for several benchmarks, such as at years one, five, and ten. Investors deal in dollars, so selling investors on a metric that outlines the growth potential of their investment rather than a vision is a lot more effective. Work with a consultant to help develop these plans.
It's time to put on your social hat and get ready to network. So many business transactions are based on being in the right place at the right time with the right people. Work as hard as you can to infiltrate any organizations and associations for the industry your startup will participate in. Infiltrating these groups puts you face-to-face with people who invest in the community and even those who might serve as your competition.
3. Crafted Pitches
Once you have your foot in the door, be prepared to sell your business as if everything you had depended on the deal. A good pitch should be passionate, detailed, and most importantly, tailored. Whether it's an investor that you want to serve as a silent partner or an investor for which you are offering a partnership, the pitch should be personalized based on your goal of the exchange. The only way you can accomplish this goal is to practice.
4. Solid Prospects
Make certain you aren't wasting your time. Only deal with solid prospects, not people that are not serious about investing or that don't have the capital to do so. Performing this step will take some effort on your part, as you will need to research each investor or investment group to learn more about the types of investments they have committed to in the past, as well as the size of these contributions. If an investor can't meet your needs, there is no need for you to waste their, or your, time.
A business advisory firm can assist you with every element of this process, and more. Speak with a consultant to learn more about how they can help you raise capital for your startup.