How To Get Your First Investors
There is an old cliche you may have heard before: don’t do business with friends and family.
It may have some truth to it, but the reality is that most businesses start with investment from those very same people. Sometimes they’re putting their money into your idea or company, while other times they’re putting in their own time or simply being supportive and spreading the word.
But to get a new idea funded, you’ll need to use all of your network, and you may need to seek out angel investors as well. Convincing early investors that you are worth funding takes a lot of work. You’ll need a strong business plan, a clear focus for the idea you’re testing, and a plan for building users and customers for it. And last but not least, you’ll need to build a list and figure out how to get inside the brains of your potential investors.
Here are the basics you’ll need to lay out for potential investors, along with the basics for building relationships with them.
You Need a Business Plan
There are a lot of ways to approach getting investors — one of the most common is to develop a business plan. That can look very different depending on your product, and some investors require a 20–30 page plan with details on every possible scenario, while others simply want to see the basic structure of how you plan to build.
The three key parts of any business plan include:
- Evidence of traction and market opportunity
- The team + what makes them a good bet
- How you plan to build as things progress
There are many other potential pages in a business plan or slides in a pitch deck, but these are the ones investors pay the most attention to. They’ll want to know that you are already testing the market, understand the size and scope of the potential opportunity, have a good team behind you, and have a grasp on what problems and opportunities you will run into as you go along.
Focus is also extremely critical. If you can’t articulate the market you’re going after, and how you intend to get users and customers, your idea is probably going to be difficult to fund. Especially in the early stages of funding make it easy for investors to see progress and give them evidence that you are focused, and are collecting data that is actually useful.
Build Relationships With Potential Investors
Pitching investors is one of the most misunderstood parts of starting a new business or getting an idea off the ground. Like any kind of sales, it’s about relationships; the better quality a relationship is the more likely the terms will be favorable and the dollar amounts higher.
If this is your first time seeking investors, here’s a simple plan you can follow:
- Make a list of potential investors and add it to a spreadsheet. Then list a potential referral for each of those listed. If you don’t have a referral, look for other people and ideas they’ve funded, and contact those folks well before you want to talk to the investor to ask them how their experience building that specific relationship has been. If you can connect with them, that’s a good way to to get a warm referral.
- Get used to tracking that list and find ways to be in their world. Sending a pitch deck or business plan is one thing; seeing them at an event can be much more powerful. So is having someone that knows them tell them they should take a look at you.
- Give them updates and don’t be afraid to stay in touch; if you treat it like a conversation they will too.
Last but not least, one of the most helpful things you can do is find a “quarterback” who’s been there and done that and can advise you on investor relationships. This person should be one of the primary mentors you seek out for your idea, whether you’re looking to get an investor to donate their time, fund your idea with money, or some other contribution. They’ve likely seen a lot of what you’re dealing with, and there are thousands of signals they’ll be familiar with that you might miss as a first timer.
As with so many challenges you’ll face funding your idea, getting the first one solidified is always the hardest. You will face rejection more than once, but with a smart plan you can crack the seal and build momentum on the investor front.
WeGreenlight.com is a platform to help you validate your ideas, get feedback, and launch with early adopters. Join us and let’s help you launch your idea successfully.
Next Up:
Subscribe below — get all of our posts sent straight to you.
If you enjoyed this, feel free to “press” the heart below.
