For any startup, money is the lifeblood.
In fact, you’d surprised to know that 29% of all startups fail due to running out of cash.
And the worst part is, out of 543,000 startups that Americans launch each month, Venture Capitalists fund only 0.05% of all startups while Angel Investors fund about 0.91% of all startups according to Fundable.
What this means is that there is less than a 1% chance for new startups to secure fundings from investors.
But on the bright side, you can improve your chances of securing fundings if you follow the plan that we’re about to discuss.
Remember, making a good first impression is extremely important to secure funding. So, make sure you’ve done your homework before you start knocking on investors’ doors.
That being said, let’s dive right in!
Evaluating the Investment Options
There are many ways to get fundings for your startup. And if your startup idea has real potential, you will definitely find investors willing to invest in your startup.
In fact, many investors provide more than just funding. They also serve as business mentors to help you achieve your goals. But in order to reap these benefits, you need to select the right kind of investor for your startup and learn how to approach them.
Generally, there are 5 investment options available for you to consider.
- Incubators & Accelerators
- Crowd Funding Sources
- Angel Investors
- Venture Capitalists
- Small Business Loans from Banks
Based on the concept of your startup, you can reach out one or more from the above options. If you aren’t sure how these investment options differ from each other, head over to the 10th point of this article where we’ve briefly explained how each of these investment options works.
Once you have a basic idea, the next step is to consider your goals before approaching them.
Remember we mentioned that some investors also serve as business mentors?
If this is your first startup, it’s extremely beneficial to choose an investor who is willing to offer more than just funding.
So, look for an investor who is interested in being actively involved in your startup. This kind of investor can teach you the business skills you need to succeed, help you lay out a marketing strategy, refine your business plan, and much more.
As a result, all the additional guidance & resources will boost your chances of success.
Understand How Investors Think in General
If you want to impress investors and get them to give you funding, you need to think from their point of view.
For instance, if you were an investor, would you fund an unproven startup?
I thought so…
You see, investors of every kind take major risks when they invest in a startup. So obviously, they carefully evaluate a number of variables and factors before deciding to invest in a startup.
So, in order to increase your chances of securing fundings, you’ll first have to prove your idea.
One of the best ways to do this is by building an MVP product and launch it in the real market. For this, you can either invest your own savings or ask for money from your friends and family.
Once you launch your product and If you get a positive response from early-adopters, congratulations! – You’ve now proved that your startup idea is worth investing in.
This brings us to the next and final step.
Create a Solid Pitch Presentation
Once you have a beta product up and running, you’ll still need to convince investors to take a chance on your startup.
And the only way to get them to do so is by illustrating how your startup is poised for success.
In simple terms, you will have to create a solid presentation which summarizes your startup. So, while making the presentation, make sure to include the following things:
- Value Proposition: The first few slides of your presentation should explain the value that your service or product provides to your customers. In addition, it is also recommended to explain how your startup differs from your competitors.
- Target Audience: Whom do you plan to serve? Where do they live? What age group your target audience belong to? Answering these questions will help investors confirm that there is a market for your startup.
- Marketing Strategy: Even if your idea is truly exceptional, your startup will fail if no one knows it exists. So, in your presentation, it’s important to create a marketing strategy to reach out to your target audience.
- Business Model: How do you plan to monetize your service or product? Investors are more inclined to provide fundings to startups having a concrete monetization plan.
Conclusion
Convincing investors can be tough, especially if this is your first time. But if you follow these steps, you’ll be more confident in pitching your startup idea to investors and you will have better odds of closing the deal.
If you still have any doubts, feel free to get in touch with us. We are multi-award winning mobile app development company.
