October 25th, 2019
Read in 10 minutes
If you are an entrepreneur like me, I’m sure you have asked yourself how to get investors for your small business. As a serial entrepreneur, I have often encountered two types of needs
- First, I have needed money to finance my project and turn it into a small business.
- Second, I have needed money to grow a business that was already underway. I’m talking about funds to invest in:
- Hiring staff
- Improving work teams
- Improving facilities
- Improving my products or services
- Technology and innovation
- Strengthening cash flow
Attracting capital for your small business is not something that should be improvised. On the contrary, you must have a solid business plan to attract investors or get any type of loan.
Let’s see the steps you can take to know exactly how to get investors for your small business, whether you have a startup or your company is consolidating.
How to Get Investors for Your Small Business? Step-by-Step Guide
Let’s design together a roadmap to get investors for your small business.
1. Know your potential investors in-depth
These should be the must-haves of any potential investor:
- Must be an accredited investor with experience.
- Must be willing to take a risk. If your business goes wrong, their finances must be solid enough to assume the possibility of not recovering their investment.
- Must know your type of company, industry, and market.
- Make sure the potential investor is not just trying to lure you with the promise of a big return on the investment.
- Must be patient enough to walk with you on your path to success and provide you with knowledge, experience and a net of contacts. A good investor can also be a mentor as you grow or face challenges.
2. Be transparent
When you introduce your company and your financing needs to a potential investor, you should be able to summarize everything in a simple presentation that lasts just a few minutes. Use the golden rule of “10/20/30” created by Guy Kawasaki:
- Your presentation must contain no more than10 slides
- Your presentation should last no more than 20 minutes
- Use a font size of at least 30 points in size
3. Keep handy all the documents that your investor may need
Prepare all the documentation a potential investor could require. This includes your business plan, your budget, the use you’ll make of the investment, and the repayment term.
4. Tell your story
All entrepreneurs have a story: tell yours. Don’t sugar-coat it, but don’t be hard on yourself either. Tell about the main challenges you have encountered and also about your strengths as an entrepreneur, as well as your future projects and how you plan to return the investment you’re asking for.
5. Be brave
Asking others for help is not easy. Don’t let pride blind you and ask for help when you need it. Assuming this is key when thinking on how to get investors for your small business. Think that behind every great entrepreneur there is always a great team and, of course, investors who have made everything possible.
6. Define the role of your investor
The role and responsibility of your potential investor must be clear from the beginning. When thinking of how to get investors for your small business, ask yourself these questions: Are you willing to share your business ownership? Will your investor provide you with advice, or will they only invest with capital?
Most Common Types of Investors for Small Businesses
To have a better idea of how to get investors for your small business, obviously, you need to have a clear picture of the types of investors you can encounter:
- They provide private financing to projects that may be risky but can also be highly profitable in the mid and long term.
- They are usually prestigious professionals; therefore, they are harder to access (arranging a meeting can be a challenge).
- Chances are you will not only have to convince the investor but also their spouse (most of the time, the capital comes from family funds). This can make the process more complex.
- They are willing to risk more than venture capital investors but will also demand a greater return on the investment. For the same reason, angel investors can get more involved in the operations of your business.
Venture Capital Investors
- You can contact these professionals in person or online. The personal component in this type of investment is not so relevant. Venture capital investors invest money from third parties: this makes profitability the focus, while the personal situation of the entrepreneur is overlooked.
- In your city’s entrepreneurial community you can find venture capital investors. Do your best to belong to that community and participate actively to be heard.
- You can look for venture capital investors in colleges with entrepreneurship programs. There you will find successful entrepreneurs who periodically invest in new projects.
- In your own industry, you can find other companies that have already established professional relationships with these types of investors. Simply ask for referrals.
Family and friends
- Although this is a simple route, it can also be the trickiest one. If things don’t work out, personal relationships can deteriorate. All the parts involved must know perfectly the risk they assume before getting involved in any investment.
- Personally, this is the last option I would choose (unless they can afford to lose the money they invest in your business if everything goes wrong)
- In this publication, you can know the pros and cons of borrowing money from family and friends.
- Allows access to capital built by the small contributions of many small investors.
- Crowdfunding platforms are very accessible and easy to use.
- You must be well-positioned in your sector or be very active in social media to access the desired financing.
- There is quite a lot of saturation in these types of platforms, and it’s not easy to differentiate your project from others to attract the attention of potential investors. And, of course, the process is slow.
- Learn more about crowdfunding here.
Incubators and Accelerators
- An incubator is an organization that looks for startups with great potential.
- On the other hand, accelerators can speed-up a project that is already underway, seeking short-term profit. Some accelerators are also incubators.
- If your company is in the technology industry, this can be a good alternative.
Want to know more about how to get investors for your small business ? Learn in detail about all these types of investors and other alternatives to business loans.
Camino Financial: Fast and Flexible Access to Funds to Invest in Your Business
At this point, I want to make a personal recommendation. Camino Financial can be your best alternative to the sources of investment explained above. Follow this simple questionnaire to know if Camino is the best financing solution for you.
Have you gone through a slow and cumbersome loan application process in other banks or financial institutions? Have you contacted investors but the process is slow and complicated?
Our loan process is easy, transparent and fast. It takes place completely online and it’s absolutely safe. You can receive the funds directly in your bank account in no more than 10 days.
Do you need a considerable amount of capital that most lenders won’t be willing to offer?
We have a wide range of loan amounts (from $5,000 to $400,000) that can adapt to any of your funding needs.
Are you tired of the restricted use that some lenders have for the funds?
We are flexible in the use you give to the funds. With your loan, you can hire staff, improve your equipment or facilities, buy inventory, start a marketing campaign, improve your cash flow, etc. You can even pay a credit card that you have used for your business.
Do other financial institutions require you al least two years in operations?
At Camino, we only ask for nine months in business!
Do you need specialized advice besides just financing?
Our business loan specialists will study your business, its features and unique needs, to find the financing option that best suits your profile.
Are you ready to take the first step to grow your business?
Simply request a loan quote. It won’t affect your credit and you will know instantly if you qualify to receive a business loan.