Cash may be king in business, but that doesn’t mean you should settle for the first investor willing to invest in your vision. The right investor should act as a thought partner—someone who adds value to your business (and not just monetary variety). In this blog post, we explore how to find the right investor for your business.
Cash is like oxygen in business—to quote Warren Buffett, “If it disappears, it’s all over.”
Data from the U.S. Bureau of Labor Statistics (BLS) shows that approximately 20% of new businesses fail during the first two years of being open, most lacking the funding needed to survive.
It’s no wonder that finding investors is one of the most nerve-wracking experiences for a budding founder.
But just because you’re in the vulnerable position of needing capital, doesn’t mean you should settle for the first person willing to invest in your vision.
You could be making a deal with the devil.
We’ve seen several companies fail out of scarcity, selling their souls to investors who weren’t aligned with their vision or going bankrupt when the relationship fails.
Because as much as they’re investing in you, you need to be able to invest in them.
You need someone who is going to be a thought partner. Someone who is willing to slum it in the trenches with you when things get tough. Someone who is going to add value (and we’re not talking about monetary value here).
So, how do you find the right investor for your business? Here are a few things to consider:
Your Goals and Values
Before you even think about meeting with investors, be sure you have a clear picture of your goals and values. Remember why you started your business in the first place: what is your purpose, what impact do you hope to have and what milestones are you working towards? Your answers will clarify your vision and values and define the kind of investors you want to work with—those who share the same ethics and principles as you.
Another important thing to consider is your non-negotiables. What are your values or needs that aren’t up for discussion? The right investor won’t ask you to sacrifice your non-negotiables.
Remember, early investors are the most important part of the fund-raising cycle. For that reason, it’s important to pick people who are true champions of your purpose, as they are the key players who will help build a foundation for your business to grow from.
Your Ideal Investor
When it comes to approaching investors, you have to think outside of the box. Your ideal investor may not have an office in Silicon Valley or wear a suit—99% of U.S. investors don’t fit the stereotype of a professional investor. In fact, many don’t self-identify as investors.
Don’t limit yourself to searching through databases or mingling at conferences to find your fit. Your ideal investors are more likely to be people who take a genuine interest in the mission of your company. They could be current or potential customers, businesses in your supply chain, or investment-minded community members who care about the problem you’re trying to solve.
The Non-Monetary Perks
Although capital is the main driver of your fund-raising efforts, money may not be the only thing potential investors have to offer. Don’t overlook considerations such as whether they have experience in the industry, contacts with potential suppliers or customers, or knowledge that may enhance your skill set—if you do, you may shortchange yourself.
A good investor is someone you can grow with. You have big plans for your business, and the investors you’re working with should believe in your long game as well.
Your Support System
Finding the right investor can be a long and demanding search. The key is to have the right support system in your corner.
Howbridge works shoulder-to-shoulder with founders like you, to help identify investors and secure capital for launch, growth or to pivot to new opportunities. We’re your trusted confidant—the coaches in your corner helping you to articulate your purpose and value, and nail your pitch.
Let us help take some of the pressure off of you in your hunt for the right investor. Book a discovery call with our team today to see how we can help.