How to Find Investors for Your Company
Whether you’re part of an early stage startup, or are looking for funds investors to expand your existing business, it is often a challenging task to find a pool of investors to whom you can pitch your business plan.
Above all, finding an investor is not always about closing the deal and getting them to write you a check. We cannot stress enough the importance of focusing on finding the right set of investors. An investor is more than just a person or company with funds. Look for investors that can offer something more than just money (and often more valuable!): experience. It can be knowledge on a given industry, sharing experience learned form past or current ventures, the ability to make key introductions, etc. The wrong investor can prove be a headache that drains valuable time and energy away from your schedule, so proceed with caution.
Here are 10 avenues for finding investors for your company
- Reach out to family and friends
- Tap into your existing professional network
- Local investor meet-ups
- Work with a broker-dealer
- Apply to an incubator program
- Enroll in a business school entrepreneurship program
- Use a crowd funding platform
- Work out of a shared workspace with other entrepreneurs
- Hire an investment bank
- Talk to people: you never know where a conversation may lead and what connections come out of it
1. Reach out to family and friends
This is probably the most common path taken by early stage startups. Often through the issuance of a convertible note. If you have deep pocketed friends and family who believe in you and what you are setting out to do, this could be great path. Friends and family often make their investment decision based on their belief in you, the founder of the company, and are understanding when it comes to the ups and downs and strategic pivots most early startups face. But beware: taking money from loved ones can complicate relationships, so be sure to communicate your plans and the risks involved upfront.
2. Tap into your existing professional network
Go through your LinkedIn contacts. Look for people that have either worked in or invested in other companies similar to yours (either in size or in the same industry). While they may not be the right fit for investors, they may be able to put you in touch with the right set of people. Contacts with the title ‘Founder’ in their profile will likely have good stories and contacts based on their fundraising experience. Another tip: search for contacts who have received MBAs from well known schools. Chances are they can put you in touch with people in the know.
3. Local investor meet-ups
If you live in a big city, chances are high that there are local investor meet ups taking place monthly. These can range from roundtable discussions at a local coffee shop to more formal pitch events that you must sign up to present at. In bigger cities, there are different investor meet-ups for various industries. Simply do a web search for meet-ups in your city.
4. Work with a broker-dealer
Broker-dealers are licensed professionals that act as investment matchmakers. There are independent broker dealers as well as broker-dealers that work for larger firms. They often take a small % of the money raised as a commission. Sites like brokerdealer.com can connect you with broker dealers that work in your industry.
5. Apply to an incubator program
There are several famed (as well as some smaller) incubator programs that mentor and fund startups (YCombinator is one example). These are often hard to get accepted to, but if you meet their requirements, the experience and contacts you make can take your company to the next level. Search online for the various incubator programs. Each has their own set of application requirements. At a minimum, understanding these requirements will give you a better idea of what these types of investors are looking for.
6. Enroll in a business school entrepreneurship program
Most business schools offer entrepreneurship classes or short term programs. Some offer programs specifically tailored to startups where you may work on your business plan with fellow students and introductions are made with investors at the end of the program. This is a great way to network, move your idea along, and be ready to present to investors at the end of the program. This does require a
7. Use a crowdfunding platform
If you are developing a product or service that can be pitched and excite or inspire consumers in a 2 min pitch (or less!), a crowdfunding platform may be for you. Many companies have raised the capital needed to place their first manufacturing orders through crowdfunding platforms. This is also a great way to test your ideas and solicit early customer feedback.
8. Work out of a shared workspace with other entrepreneurs
Test out workspaces in your city and look for places that foster a community environment with mixers and resident entrepreneurs. Some places advertise this specific function and there may be an application process involved. Stanford University even set one up targeted at entrepreneurs and offers a multitude of programs and resources to those accepted. These contacts will help connect you with investors. Some may even be investors themselves.
9. Hire an investment bank
This avenue is for existing and significantly profitable companies. The more profitable your company, the bigger and more connected investment bank you will be able to engage. Investment banks will take a commission of the money raised.
10. Talk with local business owners
All businesses require capital. Speak with local business owners that you know and hear their stories. Undoubtably you’ll learn something from their experiences and they may be able to put you in touch with potential investors. Some might even want to invest themselves.
We hope that you found this information useful. Please reach out with any questions. We offer consultation services to businesses of all sizes and would be happy to help you with your pitch deck, business plan, feasibility study, and of course prospectus.
Call us at (212) 812-2127 to schedule a consultation.