7 strategies that will cut the cost of finding investors

Startups and Entrepreneurs assume they can easily find an investor based on the product they have made, it does happen at times but not always.

In case you have invested quite an amount of time, money and effort on the product such as creating a market niche of your own and have made connections with like-minded people in the investment community it makes it easier to get an investor.

Common strategies followed by the entrepreneurs are through e-mail and contacting unknown people with a hope to find one who would be interested in investing in a less known company.  Investors do not even give any consideration to unknown entrepreneurs.  Nobody would like to risk their money with a stranger.

An Entrepreneur needs to put in quite a lot time and effort in developing investment strategies and also to develop the people network thus earning the trust and establishing the creditability for the product being developed and also for yourself as an entrepreneur too.

Few key points to start with would be

  1. Getting an investor should figure in the initial stage of Startup. In most cases, Startups get too involved with the idea of the product and delay the process of getting an investor. Initial stages will be quite driving as the product requires all your attention as you will be a person executing multiple roles. But you need to find time, plan and put in the effort for looking investors. At the later stage when the money dries up, investors can take advantage of the desperate situation you are in. This does not give you an opportunity to bargain for yourself.
  2. Be open to the feedback. Investors, as the name indicates are purely in it because they want to make a profit. They do come up with feedback perhaps about the pricing, marketing or distribution models adapted. Take the feedback. They want it to be profitable too.
  3. Finding an investor is not an easy task. Everyone you meet might not match with your enthusiasm or optimism for your business. It might take quite a few attempts to find one who might be able you understand and see your vision. So keep trying it might take quite a few rejections and months to get one.
  4. Have a test run with known investors and advisors before going to for the big shots. The first impression is the best impression. Business comes second. It is all about how you sell yourself and set the wheels running initially which matters. Try with the small investors before going for Angel group or Venture Capital; you get only one chance to make a good
  5. Know your investor. Use the people network, social media and get to know about the investor you are about to meet. So when you meet the investor in person, you are not taken by surprise.
  6. Research potential investors. Practically, you cannot meet every investor or group. So thorough research needs to be done about the vicinity of the investor, kind of investments done by them in the recent past, kind of expectations set by them in short the history of the investors which will give a fair idea of what to expect and what not to expect them. This also gives you an opportunity to decide whether to approach them or not. It gives you the insight to prepare the presentation for the meeting.
  7. Change in approach based on the stage the Startup is. If the Startup has gained initial momentum, generating revenue, has created a niche in the market you can scale for the best investors. If the Startups are in initial stages it is always best to go to ones who know you. This is where the creditability you have created with networking works.

In spite of so many investors in the market, most of the Startups are bootstrapped.  None are ready to lose money. What do the Startups have? There is nothing except you who is the face, vision and driving force behind it. So there is nothing for an investor to see or believe. You have to put in extra effort to make them believe in your vision and trust your words. Investors take a cautious approach as there are too many scams in the recent days.

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