Did you know that close to 29% of startups fail because they run out of cash? It’s the second biggest reason why startups go out of business. And having a great business idea or product won’t guarantee your funding. Less than 1% of businesses effectively raise investment via Angels and VCs combined.
As an entrepreneur, the odds are against you but don’t lose hope. There are ways in which you could beat these odds. So. here are 8 practical strategies that you could use to attract investors and secure your next round of funding:
1. Get the essentials right
According to research conducted by Robot Mascot, a UK-based business, 90% of investors surveyed said that their biggest pain point was not being able to understand the business during an investment pitch. What this tells us is that communication is key when seeking investments. As a founder, you need to clearly explain what you do and what investors stand to gain from investing in your business.
2. Attend events, conferences, and summits
Meeting the right people can unlock hidden opportunities. Be sure to attend as many global investor summits as possible. Many have moved online, making it more accessible to entrepreneurs. Even if you don’t find an investor, the knowledge you gain and the connections you make are sure to benefit you down the road.
3. Participate in pitching competitions
Pitching competitions are quite popular these days. Some even air on TV. They’re a great platform that you can use to convince investors of the potential of your business. Apart from increasing the chances of funding your startup, they can also act as a powerful tool for getting noticed.
4. Engage with investors on LinkedIn
Raising funds for your business, to a great extent, boils down to visibility. But you don’t want to be bugging investors by spamming their inboxes with your pitches. Instead, seek to build confidence through engaging dialogue. Ask for advice, share your thoughts, and comment on investor posts.
5. Run a crowdfunding campaign
Hear me out on this one. If you run a successful crowdfunding campaign, what message does that send to investors? First – You’ve successfully validated your idea. Second- There’s a substantial market for your product. And third – There’s a lower risk associated with their investment. Win-win!
6. Join a startup incubator or accelerator
Being accepted into an accelerator or incubator program can vastly improve your odds of raising funds for your startup. Not only do they give you access to capital but also provide you with the necessary support you’d need in terms of mentorship, legal advice, and a shared workspace, among other benefits.
7. Apply for govt. grants
Government grants are an excellent way of funding your startup to create jobs. And that is vital for the economic growth of a country. Hence, governments in many countries now offer funding programmes exclusively for startups. They, however, have very narrow eligibility criteria and mostly fund projects that benefit the community as a whole. You could visit your government website to find out more about such programmes.
8. Consider private grants
In addition to government programmes, you could also explore private grants to entrepreneurs. With a bit of searching, you can find several private grants that’d be willing to cover your funding needs. Just like government grants, they can be very limited in scope, and you’d need to check if your business would be eligible for it.
Raising funds for your startup is an entrepreneurial skill that you can master. There are a variety of funding options for you to consider. And depending on your business, some would make more sense than others.
No matter which stage of the development cycle your startup falls into, ultimately, you will need funds to reach your next milestone.