A Comprehensive Guide to Attracting Investors for Your Startup

There are thousands of businesses starting every month. Data shows nearly 5.4 million applications were filed to form new businesses in 2021. With so many people starting their own companies, getting funding for your startup is challenging.

But that doesn’t mean that your startup is doomed. You just have to get creative about how you attract investors. While this can be difficult for many startups, there are some things anyone can do to attract and secure funding for their idea. This guide will go through the steps needed to attract investors and get them on board with your business idea, from developing your pitch to creating long-term goals.

Create a Pitch

A pitch is a concise summary of your business that you can give to investors, customers, or anyone who might be interested in learning more about it. The goal of a good pitch is to get people interested in what you’re doing and then convince them to help fund or partner with you in some way.

The time of year a company pitches, the thoroughness of its research, and the quality of its presentation are essential factors in how successful a company is at raising capital. Hence, when creating a pitch, you must consider these and several other factors.

For example, suppose your startup makes handcrafted jewelry out of recycled materials and prefers veterans as employees. In that case, this might come across as, “We’re creating jobs for veterans while also reducing landfill trash.” This kind of statement might not seem like much on its own. However, when you tell it to an investor after briefly explaining the basic idea behind your company (like how many veterans are unemployed right now), it will probably get them excited enough about investing.

Create Long-Term Plans and Goals

This is the most critical step in attracting investors. A study by Google found that the most effective founders keep their teams focused on a fixed set of goals. You need to define your startup’s goals and milestones clearly.

• Define your long-term plan with short-term goals and milestones.
• Set clear timelines for each milestone to be achieved, e.g., six months or a year from now.
• Track your progress regularly so that you can adjust accordingly if necessary. 

In a survey of 150 founders by Wilbur Labs, 55% reported improving their business plan to avoid failure, of which 75% found success.

Showcase Your Local Authority With Business Directories

Business directories are a great way to build your brand, get in front of customers, and attract investors. Additionally, they’re also free. Business directories have been around for decades and are used by the best global brands. If you’ve ever used Yelp or TripAdvisor, you’ve seen how powerful they can be.

Business directories are an easy way to get local authority. When potential investors see that you can attract more and more local customers and get their positive feedback by leveraging online directories, they will be confident about investing in your startup.

Business listings will also help your company with SEO by ranking your website high in search engine results pages (SERPs). This will again show your commitment and growth to the investors. Hence, by listing your new business startup on an online directory, you can get noticed by potential clients and investors alike, which means more customers and more revenue down the road.

Define Your Mission and Vision

To attract investors, you must clearly articulate how your business will make money by improving the lives of others. These two statements, your mission statement (usually 1 or 2 sentences long) and vision statement (often 4-5 sentences long), are critical for communicating a concise message about what you do and why it matters.

Your mission statement should define a specific outcome for which your company exists. For example, “We transform waste into energy.” Your vision statement should outline how you plan to achieve this goal. For example, “By 2028, we will have closed our first deal with a national utility company.”

The point is that these statements are essential and should be framed in terms of outcomes rather than activities (such as building software). In other words, instead of saying something like “we provide A-to-Z business solutions,” try something like, “we improve B Corporation’s profits by 15% within 12 months.”

Think Like Investors

Thinking like investors means considering what factors they will look for when investing in a company. There are two primary factors that investors will look for.

First, they want to know if you can scale the business model so it will be profitable in the long run. If they invest $10 million and their investment doesn’t turn into $20 million in five years, they’re going to lose money. So they need to be sure that you have a scalable business model.

Second, investors are looking for companies with solid teams because this ensures that good ideas will translate into great products and services that customers love enough to pay for them. According to a study, 23% of startups that fail cite team issues as the cause. This means that investors will doubt your success if you don’t have a strong team in place.

Without a dedicated team working on your product or service, you won’t be able to achieve your goals of proliferating or scaling effectively. You also won’t have anyone who understands how to spend investor dollars wisely. Hence, you might waste investors’ money on things like paying too much for an office space or hiring unnecessary staff before sales start coming through.

Be Transparent About Your Intentions

When you talk to investors, don’t be afraid to admit that you need help. It’s a sign of strength and honesty when you’re willing to say, “I’m not sure how this whole process works,” or “I know nothing about business.”

You should also be honest about why you’re raising money. Investors want to know they’ll get something in return for their investment. That’s the only reason they’d invest in your company. Hence, ensure that everyone involved knows exactly what they are getting out of the deal and if there are any risks involved.

Final Words

Attracting investors for your startup is about having a good idea, creating a solid business plan, and establishing strong relationships with investors. If you’re at the beginning stages of your startup and want to attract investors, ensure you’re prepared with a solid idea that has been thought out properly. It’s also essential to create a business plan and establish strong relationships with potential investors so that when it comes time for them to invest in your company, they will not doubt its viability.