How to get investors for a small business is a question faced by most hopeful entrepreneurs. Even with a great idea and a solid business plan, investors won’t just come to you. More often than not, you’ll hear “no” many times before you finally secure funds for starting your small business.
So how do you turn a no into a yes?
Before you start applying for loans and reaching out to investors, there are a few things you need to know about securing capital for your small business. Here’s how to find the funding you need to get your startup off the ground or take an already established business to the next level.
How to Find Investors for a Startup
Finding funding is one of the biggest hurdles small business owners face and one of the most common questions asked is, how do I reach out to investors? Securing capital is rarely as simple as applying for a small business loan. Instead, most startups will search high and low for investors, hearing no time and time again, before they finally find investors looking for a project to fund.
- Small business loans are often the first step entrepreneurs make toward securing funding for their startup. These loans are offered through the Small Business Administration and they’re one of the more straightforward funding options. If you qualify for a loan, you’ll know you’re working with a trustworthy lender who won’t interfere with the day-to-day operations of your business.
- Turning to your community of family and friends is another smart move to make when you’re not sure how to find private investors. While not everyone has someone in their inner circle who can fund a startup, you might be surprised how well word-of-mouth works to find investors.
- Angel investors are individuals who have money to invest and an interest in securing equity in a small business. Entrepreneurs looking to pursue an angel investor should network extensively among small businesses in their community and connect with potential investors through online networks. AngelList and the Angel Investment Network are two examples of online platforms connecting small business owners with investors.
- For the right business, targeting a venture capital investment may be a good option. Keep in mind this isn’t the right fit for every business, as venture capital is typically associated with startups with massive growth potential that will make their investors a lot of money. You can apply for venture capital by attending pitch events or networking with venture capital firms online.
Is Finding an Investor The Best Option?
When you get a loan, you need to pay it back, plus interest. When you raise money, whether through friends and family, an angel investor, or a venture capital investment, you need to give up a percentage of your company. Instead, many companies qualify for government aid (grants, credits, or refunds). None of this money needs to be paid back, and the best part is you get to keep 100% of your company!
Click here to schedule your free consultation with a member of the ClaimYourAid team to find out if your business qualifies for government grants, credits, or refunds.