Get That Dough
Unless you’re willing to bootstrap your business and fund it yourself, any entrepreneur looking to start a new venture will be on the lookout for investors. You’ll need to find investors who trust you, believe in your vision, and can write the check to make your plan into a reality. But how do you go about finding the right investors for your company?
Here, 10 business owners weigh on in how they got their initial investors on board through a tactful mix of networking, competitions, endless pitches, and sheer luck.
Tap Who You Know First
“My initial investors and biggest cheerleaders were people I already knew. ... People who invest in businesses see it all, which is why who you know and people who believe in you is better than shooting off a formal business plan ‘just hoping’ the right someone will pay attention.” --Cherie Gary, Gary & Partners LLC and OACA
Clients Who Became Investors
“At the end of the day, you start your business based on relationships. My first backers followed me across multiple organizations as clients and then came with me when I launched my first company. You live and die by the quality of your relationships. Nothing is more important, not your business plan, not your idea, not your product. You can have all those be great and still fail because you don't have the right relationships.” --Elizabeth Frisch, The Thrival Company
“Earlier this year, I needed funding to scale up and keep up with demand, so I entered the Black Enterprise Elevator Pitch Competition, where I won $10k for my company. I find business pitch competitions are a great way to get funding for your business without giving up equity. If you're not at a place where you're prepared to give away a percentage of your business just yet, pitch competitions are wonderful options. Not only are you pitching to the judges, but you never know who is in the audience that may be interested in you even if you don't win. It provides a fantastic platform to get your business in front of a lot of influential eyeballs at one time.” -Gwen Jimmere, Naturalicious
Prize Money Doesn’t Last as Long As You Think
"I competed and won a spot in Bizdom, a brand new accelerator/incubator in Cleveland, and got $25,000 in seed capital. Participating in and winning that funding changed my life. I feel like I'm so much better, wiser, and stronger for having gone through that experience. My only advice — and the thing no one wants you to know — is that $25,000 goes very quickly...very quickly. Spend every dime wisely and don't let anyone make you rush through your decisions. You'll end up regretting the decision and resenting the person who rushed you." --Lindsay Sims, Customer BOOM
One Meeting Can Change Your Life
“I schlepped for a long time and heeded advice from every meeting which derailed me quite a few times. About a year in, I felt like I had lost my way with ‘my’ business model but I hadn't lost site of the mission. In late August I was literally sitting on a tiny toddler chair talking to a dad who happened to sit down to play with his daughter at child care pick up. Idle chit chat lead to work conversation. After a few minutes of talking about my business -- which only focused on my end results and my mission, he said ‘why don't you give me a call?’
I sent my deck, two of his friends came to a meeting, and they just listened then grilled me with questions about my sales forecasts, budgets, etc., but they never told me how to run my business. I raised $500,000 in that one meeting and I haven't looked back since.” --Stephanie Rach, IAG Media, Inc.
The Network, Baby
“I can't stress enough the importance of building up a network before starting a business and pitching to investors. At the end of the day, it's still about who you know and your reputation within the community. When I first set out to raise money I reached out to other entrepreneurs and friends I'd worked with in the past for introductions to investors they knew. Especially when all you have is a vision and a dream, having others vouch for you can go a really long way. “ --Christina Mercando, Ringly
Fundraising Starts Before You Need the Money
“The first investors who came on board when Keaton Row was just an idea on a piece of paper were close friends and mentors. What I learned more than anything along this journey is that the fundraising process starts far before you actually need the money. By the time these individuals invested, I had already spent a lot of time sharing my ideas and vision for Keaton Row which ultimately served as an informal pitch.“ --Cheryl Han, Keaton Row
Find Them in Unlikely Places
"I was working on my first learning tool for young children with special needs when the company folded. This work had caught the eye of an investor, and one of my previous team members spotted a Twitter message from him asking who had worked on the tool. Since I was not aware of who he was at the time or what help he could offer, I proceeded with caution. Fortunately, it turned out that he was a highly respected micro VC who had a 2-year-old who loved the project I had been working on.
I didn't have a company of my own at the time, so I told him if I were to start my own company it would have be a mission-driven company that is run by parents making the best possible products for children, not for investors. Surprisingly, he agreed with me and promised he would become the first investor when and if I was ready to start my own company.
I started LocoMotive Labs in July of 2012 with him as our first investor and board member. Through the past two years, I have raised $1.1M in investments from multiple VCs and have received 1.2 million downloads with our exceptional education apps. I thank my first investor every day for encouraging me to start this journey!" --Sooinn Lee, LocoMotive Labs
Go With the Pros
"Yiftee approached seasoned investors with experience working with local businesses and technology startups on both the east and west coasts. We wanted people who could bring their wisdom and contacts in addition to funding, and we also wanted people who are as excited as we are about the opportunity to bring eGifting to local shops and restaurants." --Donna J. H. Novitsky, Yiftee
And Let Your Experience and Skills Shine
“Leveraging credentials and experience really tipped the pitch in my favor when fundraising. Applying the learnings and successes from my work in finance and retail followed by business school was a huge advantage. My business plan was developed with an advisor who himself was a successful entrepreneur, which was invaluable. It’s a combination of your own passion and vision for the business and the knowledge you bring to the table. “ --Brooke Richman, coop & spree