There’s more than one way to get the funds that you’ll need for launching and growing your business. The trick is that for almost all, you have to deal with one of several different types of investors. These investors will decide whether they want to work with you based on how you present your ideas to them. Each type of investor specializes in a certain class of businesses. Some may not be a good fit for your business model. The right investor for you will know how to help your company grow. That’s why it’s best to make sure you’re approaching the right ones, and that includes us!
These are the most traditional and formally-structured of investing options. Getting startup investment funding from a bank is more difficult now than in the past. Regulations are tighter, which means any proposal gets a lot of scrutiny.
A bank might be the right investor for your startup if you can check off enough qualifications. That includes having a rock-solid business plan. An established relationship with their institution also helps. If you qualify for SBA loans, that can put the bank loan officers even more at ease.
Since these folks were often entrepreneurs themselves at one time, they know what it’s like. They’ve made a good bit of money and are ready to fold it back into the economy, to the tune of about $75,000 per business
In general, they prefer to focus on projects for which they feel a genuine passion. They’re still looking for a good return on their investment. They’re easier to please than many other types of investors, though. They will put money into about one out of every ten projects they see presentations for.
Say your business has already started to succeed and generate some profits. If you want to scale up, this is the way to go. A venture capital firm’s average investment is over $2.6 million. That is more than any other type of investor, so this is how you take a business from local to international.
The catch is that you have to be the 1-in-100 possible deals that presents a low-risk way to earn high profits. If you aren’t, they will pass you over in favor of another project that is. If you do go this route, professional networking is the best way to find the right specific investor for you.
This method is a relative newcomer to the investment scene. Its unique advantage is that it makes it possible to ask your future customers for startup money.
It’s even a way to kill two birds with one stone. The public response to a crowdfunding request can serve as market research. These campaigns generally raise around $7,000. The drawback is that they depend more on personal networks and social media for success.
The majority of new businesses get startup funds from the owners’ immediate circles. That means reaching out to friends and family.
The right investor might be someone you already know! While this may sound like a recipe for relationships broken over money matters, it doesn’t have to be. The key is to make sure to use written contracts at all times!
Do your due diligence with every investor who you’re considering working with. With care, you’ll come up with the right amount and plan to get your company moving.