Starting a side hustle entails a lot of challenges. However, there may not be any job more daunting and important than attracting investors so you can scale up your business and take it to the next level.
Fortunately, in today’s interconnected world, there are many avenues open to entrepreneurs who are seeking capital from investors. Regardless of how well funded and developed your side hustle may be, in a global market where scale is potentially limitless, there is always a situation where more financing and investment is required. This means it’s so valuable to understand and employ steps to effectively attract investors to you and your business.
Acquiring appropriate capital when you need it, is vital to allowing your side hustle/business to flourish and be as successful as it can be. You don’t want to be caught unprepared at a key moment or in a big introduction to a potential investor, so it’s best to put your business in the best position to appeal and interest investors.
What are investors looking for in a startup?
Investors take a lot of things into consideration before they invest in a start-up. Start-up investors meet and evaluate many prospects, and it’s essential to understand that they value a lot more than just market potential – although this remains very important. There are 4 key aspects of a startup that need to tick the right boxes to satisfy and engage an investor.
1. The Team
There’s an approach to investing that preaches to invest in great people and teams over great products and services. This rings true in the startup environment.
To best showcase yourself and your startup to investors, it’s essential to boast a great team of skilled and committed individuals. Choosing the right team can be very difficult, but it’s necessary to allocate your resources with reason and make careful hiring choices.
Covering all bases and ensuring your team has a diverse range of relevant skills and qualities provides your startup with the best set up to be competitive and thrive in the market. Hiring people who can buy into a healthy team atmosphere is a quality arguably; dependent on the startup, a more important asset to individual experience and skill. An effective, balanced, and cohesive team is a necessity to convey to your investors to express the value your team gives your startup.
2. The Leaders
The leadership team is the most vital aspect of your startup. These people will make up the group that both leads your business in their work, as well as support you as founder through collaboration, intimate discussions, and critique when necessary.
There is a belief in investors, as revealed by Harvard business review, that startups with co-founders opposed to one founder, and larger leadership teams are more appealing to investors and perceived to be more likely to be successful. Startup investors are well aware of how difficult it is to run a startup, especially alone, so they are looking for a diligent team of people to bear the workload and stress. Investors also look for authentic individuals who they share empathy for and see themselves in.
So finding a cofounder, and setting up a competent leadership team with skills that are complementary to yours is key to attracting investors.
3. A unique and exceptional business plan
Investor’s need insight into how the business plans to operate, and the vision and situational factors it is functioning under. A business plan is your best method to convey and share all the important aspects of your startup with a potential investor and provide them with the ability to not only truly understand your startup, but evaluate the value and demand in the market your product or service will bring. I’ve written a blog on the essentials to writing a business plan for entrepreneurs here, but when attracting investors it is vital you have a strategic plan for your future and measurable goals to achieve.
Your financial analysis needs to be very clear and outline a precise figure of capital required to run your startup optimally while scaling at a reasonable level. This analysis should detail how viable the startup can be, highlighting forecasted profits and revenue to interest investors keen to be rewarded for their support.
Often; it takes customers to make money, but it also takes money to make customers. Money which a lot of startups simply don’t have at the beginning of their venture, thus the need for investment.
However difficult it may be, it pays dividends to make the effort to acquire customers and build a base of clients before approaching an investor. This independently generated momentum and traction is a huge green light to investors; indicating that both the venture and the team possess value and can hold a place in the market.
Investor’s at the end of the day are looking for ventures to make them money – and if you have proof your startup can make money in the market, then the rest should sort itself out.
What is ‘buzz’ and why is it important to startups?
Buzz marketing is a viral marketing technique that focuses on maximising the hype and word of mouth potential of a product. Buzz marketing can be very influential as it convinces people; that by buying your product and siding with your venture, they are on the ‘winning’ team – receiving the best value on the market. Once the ‘buzz’ of your startup starts to grow, it can snowball into an enormous volume of online traffic and conversions into sales and profits.
Generating buzz and hype around your venture is a sure way to attract investors to your startup and acquire the capital you need.
How to generate ‘buzz’ around your startup
There are many ways to go about creating buzz and hype around your startup. There are both a range of marketing tactics and online avenues which support and drive ‘buzz’ effectively when used in conjunction with one another. The key to generating buzz is using the right channels and having everything you present be engaging.
Here are the processes to generate buzz for your startup.
Networking is a favourite for entrepreneurs because it allows them to pitch their startups and ideas to people in an informal, more organic fashion which leads to people being more perceptive and responsive to the idea. It further attaches your identity to the venture and any positive associations with yourself will be transferred to the startup.
Crowdfunding sites provide a great platform to both present your startup to the public, and to promote public engagement and sharing of your idea. There have been a plethora of startups that have gone viral and generated huge levels of hype and buzz after being discovered on these sites and then shared onto social media.
They have become highly popular with sophisticated and accredited individual investors, angels, and even banks and funds looking for new ways to deploy capital.
A well planned and executed social media marketing plan can be a great way to gain traction and popularity. You can manage your social media yourself, or you can harness the collaboration power of influencers to get your message out there and kickstart the generation of buzz around your product. Social media content can go viral and reach large volumes of people who can be converted into customers. Social media site and search engine YouTube is the most powerful tool for your startup to create hype and interest in your startup.
Ultimately; attracting investors is a fundamental step that your startup will have to embrace and take on in order to develop and scale-up. For more guidance on building your business, head to www.onlinecreatorinstitute.com to learn more.