3 Key Tips to Consider Before Approaching Investors for Your Startup

Pejman Ghadimi
Jul 30, 2017 · 3 min read

When looking at the world of online news it seems like just about every idea out there is finding funding, an angel or VC firm to help bring it to life making some people with genuine and good ideas, and in some cases even with revenue wonder what am I doing wrong that isn’t getting me funding, which is why i decided to help you understand three core components that help some people get funded much faster and easier than others.

1. Are You Actually Looking or Just Waiting?

A huge misunderstanding in the industry is that great ideas automatically get funded because they get noticed. That is highly inaccurate, people who seek funding are out there telling the right people about their ideas, businesses and ventures. They are networking, pitching and researching who to talk to.

One of the most important factors of getting funded is to get noticed but not just by having a successful business, but rather by going out there and making it clear that you are seeking funding for your business. There are plenty of successful businesses that never require funding and therefore angels and VC firms can not guess who might need funding. VCs either approached by the founders of companies or introduced through networking which then leads to funding conversations. Bottom line is get people to understand what it is you need.

2. Are You Talking to the Right People?

Another critical mistake is to actually pitch, but pitch the wrong people. Many times entrepreneurs looking for funding, miss assume that anyone with money will fund them if they are able to make a good case about returns or potential profits; but reality is that it is very hard to get funding from VCs who don’t understand your industry or how to succeed in it.

It’s even harder to get funding from investors who don’t typically invest in your types of products, services or business. As a VC myself, I fund deals related to industries where I have established resources like automotive or education and therefore would be the wrong person to pitch about the next great social app that will hit the market as my resources, leverage and capacity wouldn’t be aligned to anything other than providing money.

You have to understand that as an investor, someone funding you needs to be able to help you above and beyond money to accelerate your growth and multiply their profits.

3. Do You Have a Solid Plan Based on Facts?

Nothing is worst that coming to the table and asking for money unprepared or with the wrong facts. Assumptions are your worst enemy, and they unfortunately are made often.

Between assuming what your competitors are doing, to over exaggerating your projection of growth based on simple belief rather than data or market research is a guaranteed rejection by myself and many other angels I know.

In order to invest on a business, I look for a solid plan based on real facts and backed by sample data you have collected or validated; not what you hope will happen because you believe you are god’s gift to selling but have yet to prove it in any industry. If you truly value your sales skills, then provide data, past performance or projections based on aggressive competitor sales to validate your points.

Showing you are serious, and willing to work will broaden your chances of securing funds. It is also important to note that a business plan focused on the gains of the founder through salary projections are often red flags and will kill all momentum with investors in a hurry.

Hopefully you’ll consider these three simple but critical tips if you are struggling with raising money for your startup or venture, and don’t forget that despite all this, I always recommend doing your homework about who you are asking money from as a bad investor is worse than no investor.

Pejman Ghadimi

Written by

Educating, motivating, and inspiring Gen Y entrepreneurs since 2006

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