How To Find Investors For Startups And Small Businesses

Graph showing How To Find Investors

By Shlomo Silber, Co-founder and CEO, Bond Collective

It’s not an exaggeration to say that raising money is essential for the success of your startup or small business But as crucial as it is, many first-time entrepreneurs are confused about how to find investors in the early stages of their company’s development.

One of the keys to funding success is starting early. Don’t wait until your product is six months into development before you begin seeking financing. Be on the lookout for investors from day one. And once you’ve started searching, never stop.

Even if you’re not quite ready or if you’re in-between rounds, you should always entertain investment interest. Maintain a list of potential financing opportunities, and contact them when it’s time for an injection of capital.

Need more actionable methods for raising money? Here’s how to find investors for startups and small businesses.

How To Find Investors: 10 Expert Tips

1) Join A Coworking Space

Bond Collective coworking space

The benefits of using a coworking space, like Bond Collective, for your startup are almost too numerous to list. You can save money on overhead, get the infrastructure you need without breaking the bank, and convey a professional image when all you really have is an idea.

On top of that, coworking spaces are great places to network and find investors for your startup or small business. Entrepreneurs just like you may have leads on investors who helped them out in their time of need.

Additionally, those same entrepreneurs may now be in a position to invest in your startup themselves.

2) Consult An Attorney

It’s always smart to have an attorney available for your startup or small business. They can help you in all manner of corporate structuring, legal documentation, and tax law. They can also help with how to find investors when it’s time to raise funds.

Chances are, you’re not your attorney’s only client. They likely deal with hundreds of business owners just like you.

Some of those business owners will be new. Some will have been in the industry for years. Some may have even graduated to investing full time. Regardless, your attorney will know who’s ready and willing to provide financing.

3) Consider Asking Family And Friends

Mixing your personal life with your business life can be a tricky proposition. But your family and friends can be a resource for how to find investors for your startup or small business. Some of them may even want to personally invest.

The first step is to ask your family and friends if they know of anyone who would like to invest in a fledgling business. The second step is to ask your family and friends specifically if they would like to invest in your startup.

Either way, it’s critical to act professionally at all times and to document everything so that there’s no confusion or hurt feelings later on.

4) Approach Local Business Owners

Local business owners can be a great resource on how to find investors for your startup or small business. Like you, they probably needed funding in the past and can point you in the right direction in terms of connecting with people and organizations that are ready to invest.

If your product or service somehow benefits their existing company, those local business owners may want to become investors themselves. Start by asking for names of other investors, but don’t be afraid to pitch your startup’s prospects if the business owner shows interest.

5) Talk To Established Entrepreneurs

Entrepreneur who knows how to find investors

Established entrepreneurs can also be a wealth of information about how to find investors for your startup or small business. Network through your local chamber of commerce or Better Business Bureau.

Attend events in your town, join tech, startup, and business groups on social media, and basically try to meet as many people as you can.

As you do those things, don’t go heavy on the pitch all the time. Get to know your peers and bond over the joys and hardships of starting your own business. As a result, you’ll build strong relationships that can reap rewards when it’s time to secure financing.

6) Spread The Word Through Industry Friends

Many investors specialize in specific markets, so if you have friends in your industry, contact them for recommendations. And don’t limit yourself to business owners. Even if your industry friends aren’t business owners themselves, they can have valuable information on who’s willing to invest.

If you don’t find any leads when you first ask, don’t be discouraged. You’ve planted the seed. Sometime down the road, that seed may grow into a full-fledged opportunity.

7) Contact Local Business Schools

Local business schools are another source for how to find investors. They often have a network of faculty, alumni, and guest speakers who might know of investors — or be investors themselves — who are looking for the next big thing.

Additionally, don’t limit yourself to business schools. If you earned an undergraduate or graduate degree from a college or university, contact them about financing leads. They’re often happy to help out an alumnus or alumna.

8) Investigate Online

The internet can be a valuable resource for finding investors if you look in the right place. There are numerous websites that work to connect startups and small businesses with investment capital. Even LinkedIn and Quora can be useful if you connect with the right people.

Try to find resources that don’t cost anything, and be sure to establish credentials before making any promises. If in doubt, meet face-to-face to get a better feel for the investor and to give them a clearer picture of your business.

9) Start A Crowdfunding Campaign

Crowdfunding is a relatively new method for how to find investors, but it’s already turned into a very viable and successful option for fledgling businesses. Even several small investments can quickly add up to some pretty impressive numbers.

If you don’t get all the money you need in one campaign, it can be a great demonstration of what you can do with a little bit of financial help. Use the funds wisely, grow your startup, and then use that example in your pitch for the next round of investments.

10) Advertise

Finding investors is all about spreading the word. And what reaches more eyes and ears than advertising? Consider placing an ad in an industry trade magazine or investment publication. It’s not conventional, but it may just get results.

Keep it short and simple — “Investors Wanted” — and use it as a way to get your essential startup information in front of as many people as possible.

Advertising as a method for how to find investors

Thinking Outside The Box

There’s no one right way to find investors, just as there is no one right way to market and advertise your business. In fact, you can (and should) take a page from the marketing playbook and go guerilla in your fundraising efforts.

Think outside the box and you’re likely to come up with novel and unique ways to find investors that aren’t on anybody else’s list. The nice thing about guerilla fundraising is that it’s specifically tailored to your startup or small business. Plus, it will help your company stand out from amongst the thousands of other startups looking for financing.

Use the ideas on this list as a starting point, and then get creative and come up with your own special ways for how to find investors. Your business will benefit as a result of your efforts.

Keeping Track Of Investments

Business owner working

Whenever, wherever, and however you find funding, it’s essential to keep track of the investments made in your startup or small business.

Without some record of what’s come into your company, you’ll have no way of knowing how much you owe each investor. That’s why it’s vital to create and maintain a cap table for your business.

A capitalization table (cap table for short) is a document that illustrates the capitalization of a company. More specifically, a cap table lists all the shareholders and their corresponding assigned stock. You then use the cap table to track the total amount of shares, the value of those shares, and the equity ownership of all your startup’s shareholders.

Invest some time in the creation of your cap table. Refer back to it regularly and keep it updated as funding rolls in. That way, you’ll be prepared when your startup hits it big and the time comes to start paying back your investors.

To learn more about how coworking space benefits startups, small businesses, remote workers, and companies of all sizes, visit BondCollective.com today.

Bond Collective