Trying to find where to find investors for startups is not that easy. In fact, if you have not already tried to raise funding for your small business, you are definitely missing out on an opportunity to increase your valuation and accelerate growth before others can steal the spotlight. Finding and contacting successful entrepreneurs to invest in your startups has become more difficult due to a number of reasons.
For starters, it has become increasingly difficult to secure a steady stream of venture capital or angel investors as most are usually based in the United States and are usually unwilling to take a risk on an unknown startup. There are other methods of finding and attracting new venture capital, but most of them require face-to-face meetings and lengthy presentations highlighting the unique benefits of your product or service. Due to this discomfort level, most entrepreneurs avoid these opportunities or are forced to use their credit cards to purchase large amounts of venture capital from high net worth individuals. The result is that most startups find it more convenient and cost effective to outsource funding from larger angel and venture capital groups rather than attempting to seek investment from traditional lenders or wealthy individual investors.
In addition to a lack of qualified venture capital, most entrepreneurs fail to attract the attention of large numbers of accredited investors due to their lack of strategic planning and a dearth of market knowledge. The result is that most new businesses do not receive the financing they need to grow and operate until they launch their products or services. Most entrepreneurs do not have the financial wherewithal to enter into pre-seed or seed stage investment programs, which is essential for helping to find where to find investors for a startup. Angel investor networks such as the Better Business Bureau are a valuable resource for entrepreneurs searching for accredited investor sources, but their limited size and lack of resources limit the pool of potential investors greatly.
Another barrier for most startups is their lack of market and customer awareness of the potential rewards from using local and regional accelerators. Accelerators like accelerator programs and accelerator hubs provide seed money, mentoring, marketing, and guidance to startups looking to raise a substantial amount of venture capital to accelerate growth and reduce risk. Entrepreneurs should note that accelerators may require a significant upfront investment from an investor, and in some cases these funds may not be fully secured by third party investors. Therefore, if an accelerator is willing to partner with a startup even at a greater cost, there may not be an attractive exit strategy for the accelerator itself.
As one final consideration, startups should be cognizant of the long-term benefits of securing private equity. These benefits include a reduction in expenses for the business as well as an increase in the company’s ability to attract future customers and partners. Furthermore, companies with the support of an experienced private funding source can often reduce start up costs by hiring outside expertise to manage the business while it is being developed and tested. This can reduce the time period required to bring a business to market and give the founder more time to focus on other aspects of development.
To begin seeking where to find investors to fund your startup, the best approach may be to contact current and former entrepreneurs to gain insight into the sources they consider the most reliable. Additionally, entrepreneurs should be sure to contact venture capitalists for a variety of reasons, including to learn about funding opportunities, determine if there are any programs currently available to match the funding level they require, or simply to have someone to talk to who has previously funded similar companies. By networking with existing investors and venture capitalists, startups have a better chance of securing the type of financing they need as well as identifying companies with the best likelihood of generating a profit.
