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4 Ways to Win Startup Investors

4 Ways to Win Startup Investors
There are ways to keep startup costs from getting out of control. / Credit: Startup financing image via Shutterstock

It's rare for entrepreneurs to have all the capital they need to start a business at the exact moment a great idea strikes. More often than not, a startup needs a little bit of financial help before it can get off the ground.

A business can raise funds a number of ways, including through business loans, crowdfunding and large-scale investors. Raad Mobrem, CEO and co-founder of tech startup Lettuce, took the investor route for his company, and successfully secured several million dollars during his first round of fundraising. Mobrem offered these four tips to help you win over potential investors.

  • Be prepared. One sure-fire way to lose a potential investor is by showing you don't know your own company inside and out. You should be able to list every single relevant number off the top of your head if an investor brings it up. [How to Attract Angel Investors]
  • Never cold call an investor. The best way to get familiar with an investor you don't know is to get introduced by someone they do know. This could be another investor in your company, or even someone at another company that the specific investor has previously supported. By getting introduced to a potential investor through a mutual connection, you're already positioning yourself as a worthwhile investment.
  • Ask for advice. Asking investors for advice is a great way to share your startup idea without directly asking for funding. This is especially helpful if you find yourself with a lack of connections. Ask for tips on pitching other investors, how to best present yourself, who they can introduce you to, etc. If they show interest in your company, you can sweeten the deal by offering a small equity stake.
  • Remember that you are the investment. Most startup entrepreneurs don't realize it, but in the initial fundraising phase, potential investors aren't really investing in an idea or a company; they are investing in the entrepreneur. When securing seed funding, be polished. Know all the numbers and nuances of your idea and company, and present yourself in a way that will create confidence in your abilities as a business owner. Potential investors are deciding if they think you can run a company and manage the hardships of a startup, not whether your company is a viable business venture.

While funding can help get a great startup idea going, it shouldn't necessarily be your lifeline. Instead, Mobrem advised taking the time to build a successful enterprise, regardless of immediate funding.

"A startup is in trouble if they are dependent on funding, so it is great to start out lean," Mobrem said. "By being lean, you can organically grow and re-invest your profits to increase your company's rate of growth. As entrepreneurs, we convince ourselves that we need to grow fast, or competition will defeat us. Instead, focus on what will make your company successful, even if that means taking 20 years to build it."

Originally published on BusinessNewsDaily.

Nicole Fallon

Nicole received her Bachelor's degree in Media, Culture and Communication from New York University. She began freelancing for Business News Daily in 2010 and joined the team as a staff writer three years later. Nicole served as the site's managing editor until January 2018, and briefly ran Business.com's copy and production team. Follow her on Twitter.