Attracting the Right Investors for Your Business

Whether you’re planning to expand, or starting a new venture, you’ll need an influx of operating revenue to turn your business idea into a reality. The success or failure of a company often hinges on acquiring the right amount of money, and the right kind of investment for the task at hand.

Convincing others to take a chance on your business can be a painstaking task that requires skill, planning, determination and patience. The following five tips will teach you where and how to find the right investors for your business:

Devise a business plan. The first step toward enticing new investors is composing a clear and pragmatic plan that plots out the future of your business. A strong business plan contains three essential elements – core concepts, a path to profitability and market competition. A strong business plan shows investors that your company has a focused direction that leads to growth and profit. If possible, try to garner some sales or written assurances from distributors to help bolster your company’s outlook.

Polish your presentation. A comprehensive and well-designed business plan will be ineffectual if it is not presented in a clear and professional manner. For technology companies, creating a prototype of your product can make it more appealing to prospective investors. Similarly, you can send a prepared video or slideshow presentation to interested investors to give a more memorable presentation than a simple meeting or phone call.

Venture capitalists. Venture capital is one way to raise large sums of cash to expand your business. Venture capital firms receive dozens of business proposals every day, so making your business stand is an important--but challenging--task. Prior research is vital in order to gain the attention of venture capitalists. Investors tend to stick to what they know, so a good strategy is to find out what kind of industries each firm tends to invest in and aim for those relevant to your own. The National Venture Capital Association offers resources and information on how best to sell your ideas to venture capitalists.

Meet angel investors. Angel investors are generally affluent individuals who provide capital for a business in exchange for equity or convertible debt. These types of investors can often play a critical role in funding businesses that venture capitalists find too risky. Unlike venture capitalists, who can usually be sought out, angel investors are often difficult to come by. Connection services are available on the web to help entrepreneurs link up with angel investors, but the most effective method is to simply get busy networking at any available opportunity.

Crowdfunding. Crowdfunding is a method for acquiring small investments through online sources, and it has become increasingly popular over the past few years. Websites such as Kicktsarter and IndieGoGo allow entrepreneurs to pitch their ideas to the public and appeal for small donations toward making it a reality. It can be an effective way of raising the initial cash needed to start a business, particularly if you’re in an industry that does not require much start-up financing, such as the arts. Added incentives, like discounts on purchases for all who donate, will encourage more investors to contribute to your business.