Spearheading a startup is a dream for any young entrepreneur. It’s the beginning of turning your greatest idea from a vision into a reality. Of course, you can’t build a dream on passion alone. Launching a business takes almost as much money as it does dedication.
Many great entrepreneurs, including Palmer Luckey (founder of Oculus Rift), didn’t start their companies with a wad of cash in hand. Instead, they relied on capital from investors to take those first crucial steps into the marketplace.
Looking for funding for your startup? Here are 5 smart ways to find the right investors to partner with.
1. Prospecting Platforms
An investor prospecting platform is a great starting point for a budding startup to find a suitable investment partner. As the name suggests, these platforms help you quickly and easily sift through a credible database to locate investors who are looking to acquire new projects. Crunchbase, for example, allows you to search for similar companies to your own and see which investors have partnered with them. You can search by region, investment type (e.g. angel investor), and round size.
2. Friends & Relatives
Our friends and families are typically the first people to tell us they believe in us. Through their unwavering devotion, we’re pushed to pursue our dreams. This strong bond also makes them good candidates for initial investors. Don’t be afraid to reach out to friends for small investments in your startup – you’re allowing them to get in on the ground floor of the next big thing.
However, there are risks associated with any startup. Use family and friends for early-stage capital but be wary of any large-scale investments that could backfire and damage your relationships. Having close friends with a stake in the business can often cause serious clashes over creative control and expenditure.
In 2022, crowdfunding is more popular than ever. Crowdfunding sites, like Kickstarter, give entrepreneurs the chance to acquire large amounts of capital through several smaller donations from the public. Generally, ‘backers’ will expect a reward for their investment, whether it’s a pre-release copy of your product or just a shout-out on the packaging. For many startups, this no-interest option is highly appealing.
Choose your platform carefully, as Kickstarter requires you to raise your total investment goal to receive funds. Go Fund Me, alternatively, does not.
4. Attending Events
To gain investor attention, you need to build a strong brand identity and be in the right place at the right time. Making time for professional networking opportunities is vital. One way to do this is to attend industry events, like Techcrunch Disrupt, the annual startup, and tech news convention. You don’t even have to man a stall or make a presentation, simply schmoozing with your field’s thought leaders can help you build invaluable connections.
5. Approach a Startup Incubator
A startup incubator is a fixed-term program that supports startups by providing coaching, mentoring, and access to robust industry connections. Incubators typically also provide ‘seed funding, the initial capital required to launch your company. This option takes both luck and tenacity, as you will need to compete against hundreds of other startups to be accepted into the program. For those that are, the wealth of knowledge you’ll have access to is worth as much as the funding.
In the past, young entrepreneurs were often delayed or held captive by the need to fund their dream businesses solely from their own pockets. In 2022, you’ve got access to a wealth of resources and options for capital that can help you launch your business. Use the tips above to get started today.