How To Find Investors For Startups?

While a startup may have huge potential for growth, it will be challenging to move forward without adequate funding

Although startups have relatively lower workforce, they still need significant funds for various tasks. For example, funds are needed for operational expenses, developing new products or services, marketing and sales, R&D, infrastructure development, entering new markets and expanding the business. If you are facing a similar situation, let us take a look at how to find investors for startups.

Venture capitalists (VCs) – These can be both private investors as well as venture capital firms. If a private investor is convinced about the idea of your startup, they can lend you some of their own money. In return, they will ask for interest on the funds supplied or other forms of payout such as equity stake. VCs can also have other demands such as asking to be a member of the board. Venture capital firms work in a similar manner, but their processes are more standardized and streamlined. They will be more interested in payouts and profits instead of asking for ownership or equity stake. Most VCs have their websites, from where you can get their contact information.

Angel investors – An angel investor is comparable to VCs, but they are relatively less demanding. An angel investor is more interested in seeing your startup reach its full potential instead of focusing solely on interest payout and profits. An angel investor is also less likely to seek ownership of your startup. An angel investor helping your startup in the initial stages can significantly reduce your financial risks. Angel investors also run their website, from where you can contact them.

Govt funding – In many countries, the government allocates funding that is reserved for startups. Govt funding for startups is relatively more affordable and there are unlikely to be any demands for ownership. Your chances for receiving government funding for your startup will increase in case your products or services are in line with the government’s policies and vision. For example, export-oriented products can make government funding more accessible for your startup.

Incubator programs – These platforms can provide you the right guidance and support to boost your startup. It may or may not involve funding, but even the non-monetary resources will be extremely helpful. Incubator programs can help your startup move in the right direction and locate suitable business partners. We have already seen several success stories with leading incubator platforms such as Y Combinator.

Accelerator programs – These can vary in terms of their approach, based on the nature of the business. Accelerator programs come into the picture when a startup is looking to expand its reach and market presence. Most provide funding as well as other resources and any relevant training that may be needed. You can search online to find accelerator programs available in your region.

Crowdfunding – If you are looking to reduce your financial risks, one of the suitable options is crowdfunding. In case your startup idea fails to take off, your financial risks will be relatively lower in comparison to other types of funding. However, failure may not be an option since it can damage your reputation. After that, it may become difficult to access newer sources of funding. Some of the popular crowdfunding platforms include Kickstarter and Indiegogo.

Apart from the above, you can also choose traditional business loans for your startup. Though banks may not always be keen to fund a startup. Another option you can try is asking your family and friends to invest in your startup. But remember that such transactions can impact your personal relationships. So, make your decisions accordingly.