Why your startup isn’t attracting investors
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    Entrepreneurship

    Why your startup isn’t attracting investors

  • Why your startup isn’t attracting investors

    While it’s good to start your startup in a thriving and competitive industry, this may work against you when looking for investors.

    The business world is a ruthless and cutthroat world. Simply put, it’s not a place for the fainthearted. You probably ventured into this world lured by the seemingly attractive hours and the opportunity to strike it rich like Bill Gates or Steve Jobs.

    However, things haven’t turned out as positive as you thought they were going to. There have been countless doors slammed in your face as soon as you mentioned the words investments. This shouldn’t put you off as it’s estimated that 90% of startups fail. Acknowledging that you’ll encounter challenges is the first step towards emulating successful folks such as director Anand Mishra. Improving your startup in these areas will have investors beating at your door in no time.

    Brand

    A key metric investors’ look at before investing in a business is how big or established your brand is. Before seeking out investments you should first strive to build your business’ brand. Building this will involve creating superior services or products to your consumers.

    This will, in turn, attract customers to your brand. Once you’ve built up a good rapport with consumers, your brand’s awareness will increase. As a result, your customer base will consistently grow. Pitching an established and growing brand to investors will make it easier for them to trust you with their money.

    Investors are not only expecting their capital, they’re also expecting a profit on top. Make sure to make it worth their while by offering fair profits on their investments. (Source)

    Competition

    While it’s good to start your startup in a thriving and competitive industry, this may work against you when looking for investors. Common sense dictates that an investor will always look to back a winning horse. For an investor to back you being the proverbial horse you’d have to have been around the block long enough.

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    However, being a newbie will not fill them with much confidence or enthusiasm for your product. For you to make it worthwhile for them ensure your product or service is unique and cutting edge. Such a product changes the dynamics of the market (think Apple when they released their first iPhone).

    Management

    When pitching to investors you’re not only selling them the company’s brand, you’re also selling yourself. Being likable and smart will endear you to the prospective investors more.

    In addition to that, provide them with an opportunity to ask you critical question of how you run the business. On top of that, have your other managers or partners present answers to questions that fall in their particular field. The answers to these questions will direct the investors on whether to put their money into your company or not.

    Incentives

    It isn’t uncommon to find investors refusing to invest in a company despite how great the product, management, and brand is. When asked, some will say “they didn’t make it worth my while”.

    In simple terms, investors are not only expecting their capital, they’re also expecting a profit on top. Make sure to make it worth their while by offering fair profits on their investments. If you’re wary of taking out too much money while the business is growing, offer stock options where they get to own a piece of the company. This is sure to have their hearts racing and have them open up their checkbooks.

    DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.

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