Your startup company needs to attract investors, but as the founder and leader, you often find yourself severely pressed for time. Like most entrepreneurs, you want to spend your time developing your product or service, not endlessly updating your venture capitalist Rolodex.
So what are the low-impact, high-yield ways to catch an investor’s interest? Exactly how do you attract a VC without really trying? Here’s how.
Do a favor
Business relationships, like all relationships, are about give and take. When it comes to someone you hope will invest in your company, the relationship starts out rather lopsided. Restore your balance with potential investors by finding something you can do to give back.
While building a relationship with a potential investor, discover what issues they are dealing with and devise ways to help. You want to start your relationship on more equal footing and show potential investors you can deliver real value, both personally and professionally. Don’t approach investors like you would a bank; instead, start to build a business friendship so they want to see you succeed.
Helping another person not only builds a relationship based on mutual value, but also it makes the person more likely to want to help you in return. This has been shown in scientific studies, including a Stanford study on the link between favors and compliance. By helping a potential investor, you’re putting yourself back into a power position.
More important, however, you’re showing off your own potential value and creating a genuine friendship. This way the investor is more likely to go out of their way to help by offering funding or referring you to the right person for your idea.
Develop a compelling company narrative
Investors see dozens if not hundreds of companies, entrepreneurs, and products. How do you set yourself apart? Develop a compelling reason why investors should sit up and take notice.
Don’t just focus on what your company does: focus on how passionate you are about your business. When it comes time to show how much you care, remember: money talks. Outside investors like to know you’ve got some skin in the game, so highlighting how much personal money is in your business will display just how serious you really are about your venture’s success.
Don’t get unwieldy with your story—it shouldn’t be as long as George R.R. Martin’s 1,000-page opus, Game of Thrones. Instead, boil your narrative down to the most essential and most interesting sound bites. If your narrative doesn’t fit into a paragraph, you need to do some editing.
Once you’ve determined a company narrative, use it consistently as a brand identity for your startup. Make sure it appears on your website, across your social media platforms, and maybe even in video format. Use multiple distribution methods to make your startup tale synonymous with your company name.
Have your audience sell you
Regardless of what your company does, sells, or provides, it’s a smart idea to build up a passionate audience before looking for investors. Your company might not be ready to go big time yet, but release a beta version customers can try out for free. This way when it’s time to start looking for startup funding, investors can get a taste of your company market.
More importantly, get your built-in audience to sell your company to investors. Word-of-mouth marketing can be a powerful thing and will assuage potential investors unsure about your target market. Ask current customers for testimonials and put these quotes in press releases, distribute on your social media channels, and feature prominently on your website.
Getting your audience to promote you won’t take up a lot of time, but could yield a high reward when investors see you already have a passionate audience which will likely only grow as your company does.
Get active on social media
For the busy entrepreneur who doesn’t want to take time away from building the company to attend dozens of networking events, social media just might be the answer. Entrepreneurs can use social media to build up the company name and brand recognition without sacrificing too much precious time.
Plus, social media can allow you to connect with investors from all over the country and globe, a claim only the biggest networking events could boast. If your perfect investor is located around the corner or on another continent, social media makes distance meaningless.
Entrepreneurs should look at niche social media sites like AngelList targeted specifically to startups and investors. This way, you’ll save even more time by focusing on the social media channels most likely to get your story out and get your startup in front of the right audience of investors.
Attracting investors isn’t always easy, but it doesn’t have to take you away from the important work of building your company. These methods to make your company investor catnip won’t take up much time, but will position your startup as a great funding opportunity.
Source: AIN | Author: Aaron Pitman