Ok, so you’ve got a business idea, and you’re working to make the dream a reality, but you’ve got to consider funding. Attracting an investor, whether it’s a venture capitalist or angel investor, is no simple task, especially for a start-up. If the money isn’t rolling in yet, it’s tough to build a top notch product or service. That’s why many small businesses and startups look for funding and seek out investors.
Here’s how to attract business investors in South Africa….
You can never meet enough people. If you have opportunities to go to business events, conferences or mixers, you need to go. And, don’t just look in the obvious places. We met our first large investor in a lobby while waiting for a meeting with another person.
2. Do your research
Every entrepreneur thinks their idea is the best and most unique. Many focus too much on their own concept and not what has actually worked or failed in the past. Do your homework!
3. Know your business plan
You need to be able to answer any question about your business, whether it’s about your financials or value proposition, without looking at a piece of paper. This business is your baby. Know it inside and out. And know the answer to, “What makes your business different?”
4. Approach family or friends
Offer them a decent 12-month return on their money and use the money to get started. Get operations moving and get revenues flowing in if you can. Raising a larger round is much easier with some money in the bank.
5. You must show commitment
The entrepreneur must be willing to invest enough of their own money into this project to convince investors they’re serious.
6. Know your market
Investors prefer to back entrepreneurs that really know their market by having backgrounds that are rich and impressive in the market niche for which the company is engaged.
7. Show passion
The entrepreneur must demonstrate a contagious excitement about their vision for the company.
8. Pick the right investor
It is crucial to make sure you find the right investor. Don’t just immediately take money because it’s being offered. You don’t want an investor calling you five times a day. You want a partner that believes in you and will let you run your business.
9. Sell yourself more
An angel investor is generally not investing in the business or the idea. They are investing in you. Convince them that you are the right person to do the job, and gain their trust. This will make them less likely to ask for control of the company.
10. Know your company’s worth
Why is your company worth what you say it is worth? Are there comparable valuations of recently funded companies? Do not inflate your valuation. Investors see right through that.