Every tech CEO starts out with a dream to become the next Mark Zuckerberg, Satya Nadella or Elon Musk. Prominent founders and CEOs whose ideas and companies revolutionized the tech industry. However, great ideas alone have never amounted to anything.
Opportunity and more importantly funding is needed to bring any great idea to life. As a result, many tech startups are constantly in search of seed funding either through an angel investor or venture capital firm, to kick start their company.
Although angel investing is not a relatively new concept, it has gained more popularity in the last few years. In 2018, the number of active angel investors in the U.S increased by 16% with about $23 billion invested in over 66,000 startups. Before investing, both angels and VC lookout for startups with the potential to succeed.
Having secured a total of $26.5 million in a recently concluded seed round from investors to support our mission of raising exceptional software engineers at Decagon, we have great insight on how best to position yourself to attract investors. Here are a few tips on attracting investors to your company, Read on!
Every CEO is first a salesman, irrespective of the industry you fall into. You have a product or service that you want others to buy. In order to do that, you have to successfully sell your product or idea to others, in this case, potential investors. Investors take risks on every investment, however, it is your job as CEO to convince them your company is worth the risk.
Sell, not just your idea, but the investment returns they would be getting. As wonderful as your business idea may be, investors want to know what’s in it for them, so emphasize how your idea would generate profit.
The best ideas are the ones that solve a problem. There are many startups that are simply a reinvention of what already exists. If you are looking to attract investors, your product should be one that stands out.
Angels and VCs are more likely to invest in a company that actually “shows” potential. That is a business idea that is able to solve real and practical problems while still generating profit. Build something unique so that without much cajoling, your product should be able to sell itself.
Another important way to attract investors is to show profitable results from the early stages of your startup. That is, get your product in the market and in demand. Although this might be a bit difficult if you are just starting, seeing as you need funds to get your business idea running.
However, investors are more likely to show interest in a business that already has some market traction and customers willing to buy, than one without any. Important metrics such as revenue and profit being made, target demographic, market and pilot customers tell investors that your product is profitable and can deliver.
Nowadays, distance is no longer a barrier to getting investments. Thanks to a number of online crowdfunding platforms, CEOs can get the funding needed to accelerate their companies from any part of the world. There are all types of investors on many of these sites looking for a viable business idea to invest in. Make use of these platforms by posting your company there and highlighting the results your products has garnered so far. Show them the best metrics and traction your business has gotten.
You can learn a lot as a budding CEO looking to grow their business from someone else’s experience and advice. There are a number of angels who not just invest money, but their time and experience into your business. This person could show you the ropes and help build your business.
The best way to go about this is to find an investor whose goals align with yours and seek their advice on growing your business. Be open to learning from their experiences and ask questions where necessary. Even if they end up not investing, they are more likely to point you in the right direction on getting funds.
Any CEO worth their salt knows how valuable networking is. Go to events. Strike up conversations. Meet new people. Expand your connections. You just might be two phone calls away from your angel investor.
The tips given here are both practical and doable. Investors are looking out for businesses with the potential to become the next best thing. CEOs with unique business ideas looking to attract investors in their business can apply any of these tips to take their business to the next level.
Attracting Investors to your startup also means you need to build a solid engineering team that can drive innovative solutions.