Finding the Right Investors for Your Business

One of the biggest reason people cannot find investors is that they have unrealistic ideas of what an investor can do for them. Often, they oversimplify the reasons for finding an investor. They think all they need is someone to write them a check to fund their business idea.

Meeting with investor

photo credit: RODNAE Productions / Pexels

Finding an investor is far more nuanced. You are looking for someone who shares your vision about the value of your business idea. In essence, you are looking for a business partner.

You don’t just need to find someone with deep pockets. You need to find someone who understands your vision, someone who has enough wisdom and experience to understand the challenges ahead, someone with the resources and connections to support your plan.

Here are some guidelines to keep in mind when looking for an investor:

1. Before seeking an investor, understand your business idea and your investment needs better

It makes little sense to ask for something if you’re unclear about what you need. So before you ask anyone to invest in your business, get a clear picture of your business idea and what you hope to achieve.

Also, when you have a deep understanding of the intimate details of your business, you will know what type of investor you need to back up your business venture. For instance, the Chernin Group (TCG) specializes in culturally significant investment opportunities. For example, they contributed to the $30 million startup capital that Headspace needed to launch their guided meditation and mindfulness training company. They resonated with the company’s cultural vision to restore peace of mind to frazzled people in a fast-paced society.

2. Recognize that different investors provide different types of support

Some investors like to adopt a mentorship role. They want to help entrepreneurs navigate the complex business world.

Other investors prefer to play the role of a silent partner. They trust your business knowledge and years of experience in your industry to run the whole show.

If you don’t clearly understand the myriad details of your business idea, then you will not know what kind of investor to seek as a business partner. In fact, you will not even recognize whether you need a mentor or a silent partner.

One big mistake you could make if you don’t fully comprehend your business idea is to underestimate your startup costs and ask for less than you need. Additionally, if you choose the wrong investor, you may get into conflicts with them.

You might consider the investor aloof and apathetic because you chose a silent partner when you needed a mentor. Conversely, you might think the investor inquisitive and interfering because you chose a mentor when you needed a silent partner.

So, take your time finding the right investor. Be patient. Persist. Keep on refining your business idea. Keep polishing your approach. If you stay the course, you will find the right investor, a true business partner who will help your idea flourish.

3. If you’re not getting anywhere, troubleshoot your investment strategy

If you struggle to find an investor, troubleshoot the problem. You may discover the problem is not what you think. The problem, for instance, may not be that your idea is ahead of its time. It may lie in your business idea or your presentation.

Here are some questions you can ask yourself about the value of your business idea:

  • Does this business idea have a serious flaw?
  • Do I have enough knowledge and experience to execute my proposed business plan?
  • Do investors believe I don’t have a realistic business plan?

Also, review your approach. Your business idea may be fine, but you’re not approaching the right investors, delivering awkward presentations, or making unfair and unreasonable demands on investors.

In sum, when looking for a business investor, you need to understand three critical things:

First, you need to get a better understanding of your business idea and the investor you need to fund it. Second, you need to understand that there are different types of investors. Lastly, you need to understand what to do if you can’t find an investor.

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