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Especially if you're strapped for cash, you may want to jump at the first offer that comes your way. However, your investors will have a hand in your business. It's worth taking the time to get to know them. Find out as much as you can about their investment track record. If they've previously invested in other companies, see how those companies are performing today. The best investors for you will be people who have experience in your industry. For example, if you have an idea for a mobile app, it isn't necessary that your investors are computer engineers, but they should at least have a basic understanding of how your app works and what it does. Based on your research, you should be able to come up with a list of 20 or 30 investors you can focus on. When you start talking to professional investors, you'll hear them throwing terms around that may be unfamiliar to you. Take some time to research and read about venture capital and startup investing to avoid an embarrassing mistake. Investors will be interested in the value of your company. They may refer to pre-money valuation and post-money valuation. The pre-money valuation is the agreed-upon valuation of your company before funding. The post-money valuation is the pre-money valuation plus the amount of money invested. Become familiar with rounds of investing. The first round typically is referred to as the "Seed" round. You may then proceed through A, B, and C rounds of financing. When investors fund your company, they'll receive shares of stock in your company in exchange for their investment. Read up on the types of stock you can issue so you'll understand what investors are asking for. Online networks, such as AngelList, do more than connect you with private investors. These websites also have educational resources that can help you build your business plan and market your idea. Craft your profile carefully and share your page with family and friends to gain possible connections. An investment is not a loan. When you pitch your idea to investors, they want to know that they will eventually make money off of their investment. Your business plan should clearly show how you intend to monetize your idea and when you expect to achieve a profit. Also make sure your start-up expenses are realistic. Investors want to know that you have a reliable budget and will be able to launch your product or service without needing additional funding. Successful private investors may hear hundreds of pitches every week. Stand out from the competition by letting each investor know exactly why they should have a personal interest in your project. Ideally, your investors will provide not just money, but resources and expertise to help your project launch and succeed. When you're planning your pitch, think about what each specific investor could add to the project. It may help if you can demonstrate that with the assistance of a particular investor, your project would perform better than if you used anyone else. Don't be afraid to appeal to an investor's ego. Encourage them to believe that they alone could provide an immense benefit to your project. Selling your product or service to an investor is only part of the equation. You also must convince them that you're the person to run the project and get it off the ground. Think about why you are uniquely suited to develop the project. It needs to be something beyond the fact that you came up with the idea. Highlight related personal and professional experiences that give you insight into the project that no other person could have. Especially if you're trying to enter a relatively saturated market, you must be able to differentiate yourself from the competition. Be prepared to show potential investors what your product or service offers that your competitors don't. One way to do this is to focus on a particular niche that is relatively untapped. This could be a target location or a particular demographic. When you first start looking for investors, you'll likely hear no far more often than you hear yes. Just because you weren't the right fit for a particular investor doesn't mean your idea isn't any good. If investors provide any reasons as to why they aren't willing to invest, take that feedback seriously and see if you can make any improvements in either your project or your pitch based on that. An incubator or facilitator is a business designed to help develop and grow start-ups. Incubators are particularly common in the tech industry. Investors may take on a more hands-on, mentoring approach. In the US, check the website of the National Business Incubation Association to locate incubators near you that could possibly help you find investors.
Research investors thoroughly. Learn common investment terms. Check out online angel investor networks. Craft a thorough business plan. Personalize your pitch for each investor. Focus on selling yourself. Identify what makes your idea unique. Learn to handle rejection well. Look for a local incubator.