Last Updated on February 3, 2022 by Guest
Building a startup often requires you to pour your heart and soul. However, passion is not enough to keep it up and to run.
You need funds to keep on going, and this is where investors can be helpful.
The question is: Is your startup attractive enough for investors to bring out and sign their checks?
Sure, you know your startup from the inside out. However, what is essential for you may not be what matters for your potential investors. This is why you should prepare yourself when attracting people who can fund your business.
That said, here are 11 key strategies that you can practice to attract and retain good investors for your startup:
Great business practice is pursuing long-lasting relationships. Over time, the relationship you cultivate and strengthen with others will eventually pay off in the long term. Many entrepreneurs focus on what’s before them. However, they don’t think about what’s next for their company or what will happen in the future.
Also, make sure that you work with your most-trusted employees, associates, and partners. By forming meaningful relationships with your investors, you can surround yourself with people who want the best for you.
Make sure that you’re generous with investors in sharing the good news. Send them product announcements, press clippings, holiday cards, customer mailings, and more. Don’t forget to invite them during your grand opening, tour them in your new office space, or invite them to your holiday office party.
You can also send these via email or fax to keep the costs down. If you feel that it’s a hassle to distribute files, then you might consider creating a password-protected investor relations page on your site.
Transparency is another thing that you should keep in mind. Don’t try to hide bad news or the truth, as this will later bite you later on.
Most investors don’t like surprises, so don’t try to conceal it from them, as it’s going to come out eventually, anyway. By being upfront from the onset, you can cultivate trust from investors and build stronger relationships.
Also, keep in mind that most investors are on your side and want your company to succeed. They understand that most businesses have their ups and downs, and they might even step in to help or offer you advice.
Many investors may want to look at your books before they consider investing. Chances are, they also need to ensure that the information that they’re getting is accurate.
Your investors may also ask you to show them your financial statements. That said, it would be best to consult an accountant or financial advisor to review your startup’s bank statements, taxes, and so on.
Remember that this doesn’t show a lack of trust on their end. What your investors want to know is how well you manage your finances. That’s because it can help them determine whether they can achieve a reasonable ROI.
Any changes in your business or your decisions affect how well your business performs. It would be best if you gave investors a heads up about these recent changes, as well as the critical choices that you’re going to make.
You don’t have to share everything. Nonetheless, it’s essential to share significant changes and decisions with your investors. Keep your investors updated as much as possible with every change and judgment to be on the safer side.
When running a business, you’ll have to do some marketing to build a relationship with your customers—fortunately, several cost-effective ways to market your business to the people who matter most to you.
So, think of the things that matter most to your target demographic. What are their pain points? What are the passions they’re pursuing, and how can you help them with that?
You can curate content that appeals most to them. You can also try sending them a unique direct mail. People will think of it as a gift instead of another ad, as it’s highly personalized.
Adding shareholder perks also has its advantages.
Nonetheless, investors won’t necessarily buy your shares for the perks. Investments need to be chosen for future dividends and growth in capital.
Shareholder benefits can also make the share much more desirable. This allows you to create better relationships with your investors.
All your investors should also have equal access to information. You can do this by sending your investors regular reports simultaneously. You might also want to include a note that they’re welcome to ask questions.
Doing so can avoid asymmetry among shareholders, which is illegal and annoys them. So, by treating all shareholders the same, you can save yourself from future problems.
This also sends a clear message of fairness within your startup. This is something your shareholders highly appreciate.
You may also come across investors that may contact you for “a little bit of information.” Make sure that you politely stand your ground and tell them that you will send all information simultaneously. By treating shareholders equally, you’re sending a clear message of fairness that they’ll appreciate in the long run.
As your startup grows and scales over time, you might need several cash injections. Let’s say that your business model needs to change to support new technology, and you’ll need more funds.
Now, if an investor has enough faith in your startup, they’ll support you as you continue to grow. But most investors don’t like it if they’re treated like an ATM.
The chances that they’ll be investing in a follow-on company when the first startup fails significantly reduce. More so, if they don’t keep shareholders up to date or there’s little to no communication.
Chances are, most of your investors are busy, and monitoring contract renewals aren’t on top of their to-do list.
One way to ensure that your sales team stays engaged with investors is to provide contract management tools data access. Doing so allows you to retain your investors throughout the entire customer lifecycle from proposal to renewal is that they have
By providing an automated renewal strategy, you’re providing investors with a consistent end-to-end experience. This can help them gain confidence in your startup.
Your investors feel they need more than the money that they provide. So, if they offer you their specific expertise, consider it. Asking them for advice allows you to receive valuable feedback and help improve your overall bottom line.
You’re also showing investors that you value their counsel. This can boost their confidence in themselves and with your startup.
By understanding the key strategies listed above, you will be building a great relationship with your investors.
This means that they will root for your startup’s success. In addition, you have people you can rely on when needed. This includes having a mentor who can help you navigate the startup industry.
It also shows them that you are using their hard-earned cash to make your startup grow and succeed.