Most entrepreneurs kickstart a new venture with their lifelong savings. It might seem enough to get the operations running, but there would be a need for additional capital in the long run. Perhaps, you might want to open a new business branch or purchase a plant for manufacturing. In such situations, entrepreneurs opt for bank loans since it seems the most feasible option.
Although there isn’t anything wrong with acquiring debt, it exposes businesses to a lot of risks. So, why not explore other capital funding options? Nowadays, wealthy individuals have been eying companies developing innovative solutions for customers. Hence, you can find investors and raise capital through them. In return, you may offer them a small share of profits.
However, you have to make your business idea attractive to capture investor’s attention. Unique business ideas and a healthy financial position would never fail to attract investors. Do you want to learn more about this? Have a look below. Here we are highlighting five ways you can attract investors to your company.
1. Share Financial Metrics
When it comes to investing in a business, investors want to learn about its financial status. They have to ensure the business can make profits since they are putting their money at stake. For that, you have to share your financial metrics. For example, you can highlight the profitability ratios such as net profit margin, gross sales, etc. Similarly, calculate the return on assets to show how much money you generate from assets.
If you aren’t familiar with these metrics, start learning the ropes. With eLearning models and online schools, you can complete your education without going to school. Hence, I am looking for an MBA with an accounting concentration online to have a flexible learning experience and develop a keen understanding of finances. In addition, it will equip you with the financial know-how needed to calculate metrics and ratios, helping you attract investors to the company.
2. Show Passion & Commitment
If you want people to develop an interest in your company, show them your commitment and passion. You have to demonstrate a lot of enthusiasm and a high level of interest in what you are doing. Firstly, learn everything there is to know about the brand and industry as a whole. Having in-depth knowledge of your niche shows that you have authority and interest in the venture. When others see this passion, it will automatically make people excited about your idea, unfolding investment opportunities.
Moreover, ensure commitment and passion is visible in your pitch. Finally, you have to make it as persuasive as possible to convince the investors. For example, you can use stats from sales projections and market analysis to showcase your credentials as an entrepreneur. You can even talk about the company’s accreditation and endorsements to illustrate you have the skills to make the business a success.
3. Pitch A Return on Investment
In the finance world, you need money to get customers, and you need customers to earn money. It would be challenging to break this cycle but not impossible. You have to approach clients before finding investors. That way, you can use your business profits to lure investors. In other words, always pitch a return on investments so that investors know what’s in it for them. After all, they don’t want to invest millions for the sake of nothing.
Entrepreneurs can offer a stock that pays high dividends. It would provide investors with a stable source of cash flow instead of only long-term equity. Moreover, the immediate rewards in terms of dividends can attract potential investors. Remember to be specific about the amount of the dividend and show sample reports. It develops investors’ trust in the company while ensuring they don’t set unrealistic expectations.
4. Soft Sell through Networking
In today’s digitalized era, people don’t acknowledge the importance of networking. In addition to building connections in the industry, networking allows entrepreneurs to pitch their startups less formally. You can start networking within the local startup and investing community to meet new investors. For this, you have to learn the art of organic soft sell. You have to start by talking about the problems people face and how you are willing to do something about them.
Similarly, shed light on the value your business idea will offer to the consumers. Besides pitching the idea, you are also relying on social capital that will influence the investment decision. Most importantly, only keep the conversation going if the other person looks interested because the goal is to sell organically.
5. Join a Startup Accelerator
Are you new to the entrepreneurial world? Often, emerging business owners don’t have direct connections with investors and venture capitalists. Well, you can apply to a reputable incubation center that can lead their network to your startup. Almost every startup accelerator provides entrepreneurs a platform to work on their business ideas under the guidance of industry experts. It refines the business model, making the startup more appealing to investors.
After 4-6 months, they bring in investors from worldwide and allow entrepreneurs to pitch their ideas in front of them. However, it doesn’t guarantee funding but improves the odds of raising a follow-up round with investors. Therefore, create an appealing pitch that keeps the investors hooked and leaves them wanting more.
Raising capital through investors is possibly the ideal thing. You don’t have to repay investors, nor do they charge interest; instead, you only have to give away a small share of profits. However, the real deal is in finding the right investors. You have to build networks in the industry and try soft-selling your venture, or you can join an incubation center. Likewise, entrepreneurs can attract investors by showing passion and financial metrics to earn a stable return.