“Fortune sides with he who dares.” ― Virgil
Money keeps businesses moving: from paying employees and acquiring the resources necessary for the product or service, to funding daily operations and planning long term strategies, securing funds is a VITAL part of running any enterprise.
Keeping your startup going and growing can be difficult, but it is definitely not impossible. Successfully generating profit and managing finances will make all the difference. But as most business owners know, it wouldn’t be smart to solely rely on generated income alone, especially during today’s unsteady times. Bootstrapping a startup is sometimes possible but often times you need the help of venture capital or private equity firms, or at least angel investors. Seeking investors can help set you on a path of steady and sustainable progress.
Some experienced entrepreneurs are likely to already know someone who might want to invest — but for those starting from scratch or venturing into new territory, it can be more challenging.
How To Tell If You Can Trust An Investor
While it is true that some enterprises can actually turn out to be frauds such as Theranos, not a lot has been said about how investors can hurt businesses, too: take for example this case where a conman set up a fake office that scammed nearly US $30 million from different startups. While not as widely reported as when it happens the other way around, some people really do make an effort to hurt businesses and take advantage of their needs.
Fake investors can throw a considerable amount of time, effort, and money down the drain for your new startup venture. Learn how to protect yourself and your business by knowing the traits and behaviors of trustworthy investors, as well as what you should be looking for and preparing:
● Ask For A Portfolio Of Startup Investments: To avoid fraud, it is a good idea to be able to review the investor’s previous ventures, as well as speak to the companies’ executives if possible. This is to ensure the reliability and legitimacy of the investor and how they have helped other businesses.
● Carefully Review Paperwork: This is the worst possible time to try and skip ahead to the finish line: you should always read a contract thoroughly and ensure that there are no discrepancies between what was verbally discussed and what’s written on paper.
● Prepare Your Own Due Diligence: Each party should pay for their own necessary audits and important documents — be wary of fraudulent venture capitalists who might ask you to pay for such things only to run away with your hard-earned money.
● Verify Affiliations: The easiest way to see the legitimacy of a venture capitalist or firm would be to see if they are members of the National Venture Capital Association.
● Have Your Lawyers Handy: If a fraudulent company attempts to dissuade you from checking with your legal team first, say goodbye!
These pieces of advice are among some of the most basic guidelines that you will want to keep in mind to keep your business safe.
Connect With Legitimate Investors
Now that you know what to look for and what to avoid, how do you find investors who want to see your business grow?
Some startups usually tap the people closest to them first. Friends and family are often willing to invest in their loved ones’ ventures. Other common options include taking out a loan, seeking funding from businesses or academic institutions, and crowdfunding on online platforms.
Private investors are also an option — angel investors and venture capitalists can also provide significant funding to startups in exchange for shares in the business.
Entrepreneurs can connect with business capital brokers and trade associations in order to help them find the most compatible investors. These institutions help businesses get in touch with people who are looking to invest in them. Another reliable option is seeking connections through your local business community for first hand advice.
Ten Minutes To Change The Future Of Your Business
Once you are prepared to seek out potential investors, gather up the courage to share your ideas with the right people. Looking for trustworthy investors can feel tricky (especially with the pandemic changing the way businesses get started and keep running), but opportunities are closer to you than you might think.
The Farm Soho will be hosting an online pitch event seeking to connect startups with investors. For ten minutes, entrepreneurs have the opportunity to digitally present their businesses to potential investors, giving them the chance to find reliable backers.
If you think that you have got what it takes, don’t miss your chance — sign up today!
