How to find an investor and raise funding for a startup? Once again!

There are a lot of startups in the world today, most of which are puzzled not only by improving the product but also by the search for investments. The search for an investor is a systematic and painstaking work, which at the same time is a very important part of the development of a startup.

A few days ago we wrote an article about how to get an investment with the tips of startups and it found a huge response from people. Some of them wanted to share their vision of the situation, so we decided to write a continuation of this article.

We discussed that there are multiple ways of securing funding for your business venture:

1. Startup funding programmes like Nordic Accelerator or Startup Europe.
2. Various startup accelerators like Y Сombinator.
3. Venture Capital firms.
4. Angel Investors on platforms like AngelList.
5. Crowdfunding through the platforms like Kickstarter.

However, you cannot simply use one of the methods and wait for the money to appear. The search for funding is a very difficult process, and a lot of factors should be taken into consideration.

First of all, the choice of an investor is an important and responsible matter. Because this person gives you not just more money — you get his/her experience, network and the resources to make more income. You should choose not just money, but the person.

Here is what Paul Powers, Forbes 30 Under 30, CEO of Physna, Founder of Zoozler told us about this topic:

“At the end of the day, investments are financial transactions. You have to explain to investors why they should trust you with their money versus somebody else, what they can expect you to achieve with that, and when they can expect you to achieve that.

However, it’s also important for you to make sure they share your vision. This is a two-way agreement and while it’s certainly important that you attract the right kind of investors, don’t forget that those investors have to be attractive advisors to you as well. You don’t want just anybody`s money. Rather, you want people on your team who see the vision and are able to contribute in one way or another.

The fact that the investors are putting cash into your company should only be part of why you are adding them on as a co-owner. And as co-owners, they need to share your passion, your vision and beliefs in what you are doing. Otherwise, all you have is a walking ATM. But that’s not valuable in the long-run if they lack knowledge in your industry or are unable to help you with their connections or the wisdom they’ve gained from their experiences. Investors can help you to avoid mistakes because they have made them already, they can help you to put together a certain part of your organization. You’re always going to make mistakes, but you can certainly mitigate the risk and magnitude of many mistakes if you have people around you with experiences and talents that complement your own”.

But be sure, that you have your own ability to run a successful company and to prove that. Attracting an investor could take a lot of time, but during this period you must show the development of the product, prove its competitiveness and show first results. Therefore, it is necessary to understand that no matter how promising and cool your startup is, its first investor is YOU. The peculiarity of the market is that you need to start earning from the first day, and the best investor is your client.

This is the experience of Adam Hollander, COO at OnlineMedEd, Mentor at Capital Factory

“The majority of tech founders have an idea (sometimes good, sometimes bad) and wish to build a product. But then they usually find themselves in a place where they don’t understand how to turn that product into a business. They don’t know how to sell it and as a result find it hard to see a path of being able to pay their own personal bills, let alone run a company.

So once they have their product many decide the next logical step is to do what all of the other tech companies seem to do: raise money. In many cases, this is simultaneously challenging and the wrong decision for the entrepreneur. It’s challenging because investors want more than a good idea or product — they want to see the business plan of how you’re going to execute and provide a return on their investment. It’s the wrong decision in many of these situations because if you raise money before you have “any” traction, you’re going to pay a meaningful price for it in regards to your valuation.

Many entrepreneurs think of raising money as a badge of honor — a sign of success. It’s usually not. In reality, the goal should be to gain early traction; waiting to raise as long as possible in the earliest days. That’s the time where even small amounts of progress can yield significant differences in overall valuation. Entrepreneurs should either seek out advisors, partners or co-founders who understand business; sales, marketing, product strategy. They should then do whatever they can, using the scrappiest of methods, to find initial customers and prove success with them. Only then should they look for investors; because at that point, they’ll be easier to find, easier to impress, and they’ll keep more of their equity stake which starts to matter a lot more in later growth stages”.

Remember that investments do not come into the idea, they come to the team. If you are refused, it means that the investor did not believe that you can build a business. It is necessary to understand that you are interested in the product itself, and the investor — its sales. In addition, the creators of the project are always expected to understand where the company will develop, how much money you raise and for what (phase and for how long), how much the company costs through the eyes of an investor, etc.

Elvis Ge, Chief Marketing Officer, Co-founder at Pikurate shared his opinion:

“From Pikurate’s experience, we realized the team itself and the idea are both extremely important. Not only should the investors see the vision as most often times the first iteration of the idea is not the end goal, but they also need to believe that the team itself can make it happen. In this way, building relationships and talking with many people will connect you to the right investors. Obviously, having a good traction and credibility from previous startups help the most, but many new entrepreneurs may not have such experience nor does the investor know of them. Thus, you need to build that credibility one person, one interaction at a time. It’s not easy. And once you find an investor that believes in you, you have to maintain that and go above and beyond the expectations. Eventually, results and actions speak louder than words”.

So you should always start with yourself: evaluate your best side, and be ready to show the real success of your project. For those who are looking for, there is always a solution, and if you pay enough attention to finding an investor and correctly present the product, then success is guaranteed.

What about your experience? We would appreciate your thoughts in the comments below! And if you liked the article — please share it with your friends and colleagues!