7+ Investment Tips For Startups Before Approaching An Investor
I have met many start-up companies in my life. And they were all different. But what they had in common was the need of investors money. Money in the first place, and then – the smartest ones – the investors connections and business help.
7 Investment Tips for startups before approaching an investor
Longer I have been in a start-up environment, and Bas and VCs too, more often I see “early start-upers” trying to reach the investors. In 99 % of cases, they were unsuccessful. Some of them could even close their door for future cooperation. Why? What is needed to be done before you go to an investor?
First investment tips for startups: Idea is not everything, it is everything
Some of the cases were in this situation: Damn, I have such a good idea; no one does; everyone would be interested in supporting it with their money. No. It just did not work like this. First, you need to work on your idea a lot. A LOT. And remember – good idea but bad management = no success at all. Bad idea and great management = can lead to profit. Interesting, but true. Because there is always customer out there waiting for you, even you do the craziest thing in the world.
So you work at your startup’s idea, well done.
When you start to work on your idea, do market research, make a prototype, talk to potential first users, then give your prototype to them to try and explore, you collect the feedback from them, make a logo, buy a web domain, make a web page, do all the copywriting there; you can have a feeling you did a lot. And now it is the time to grow, but you need more money for that – the investment. The question is – is it enough?
FFF – Friends, Fools, and Family
It might be enough of what you did so far, but more energy, time and yes, money too, you will invest in your idea in the beginning, the higher is the probability of gaining interesting investors later on. It is your idea. You are the founder of the whole situation. You have to be the most enthusiastic about it, and your enthusiasm must be contagious. If it is so, then it might be easy to persuade your friends and family to get engaged. Then the fool well actually might come by themselves.
First real customers
That is the right time when to come to the investor. Not while your fools are paying – not with the first really paying customers, but after few early adopters. What you might be able to do in the meantime is to introduce your idea to as many people as possible, to get on track fast when it is the right time.
One of the most important investment tips for startups: Marketing – word-of-mouth.
It is important to let to know about yourself. Anytime, anywhere. Be annoying with it. Even though they will tell you, in the beginning, your idea is not cool, the potential is low, the competition is strong etc. It is easy to do a lot of marketing, and PR especially, even with almost no budget. Go to start-up competitions, talk about your project at different seminars and places. But never talk about your project. But talk about the benefits of what you do, about the customer values. Never features, always values. Like this, you will get a lot of word-of-mouth, and the investors probably hear about you already.
WOM and Early adopters.
This is the right time to go to an investor. You get to know the market, know your business, have paying customers (also your value got higher), did a lot, have more information, better-shaped visions for future development. This is the right time. If you already tried to attract the investor earlier than this, no problem. Work on your project, continue, and come again later. The investor will like to see the development you already did.
Plans, real-time plans.
Before you go to an investor, you should know what you want. How much money. What you are demanding and what you are selling. For what you will use that money. How you plan to grow. Never ask for money, if you do not have an idea of how to spend them. That is silly and easy to detect. If you ask for money and have a no-good and precise idea of how to spend them that can make you lose the investor, even the investor was interested.
So before you approach an investor: work, work, work, and them make plans.
Tech Startups Magazine.
If you are interested to keep updated with the last Tech Startups News, write a comment below and we will contact you.