5 Strategies on how to approach an investor for your startup

Many entrepreneurs likely started their journey because of a compelling desire to create innovative products/solutions that can address existing problems whatever the case may be.

The question of how to raise external capital in order to sustain their startups becomes unavoidable. Some are completely self-reliant, preferring to bootstrap; others who aim to invest in growth prefer otherwise.

If you decide to go the latter way, it’s best to do your homework. Granted, it may be exciting to get that first check from just about any investor, making your entrepreneurial dreams come true.

That glow of happiness can quickly fade away if you fail to do proper research. The following strategies will be instrumental as you approach investors as a startup.

Streamline your search

There is a saying that many are called, but few are chosen. This is a very critical strategy that shouldn’t be overlooked. It will open your eyes to the reality that not every investor is the right fit for your startup the way a square peg can’t fit a round hole. Let’s take some examples.

There are investors who look out for early-stage companies while others avoid them, viewing such as high risk. This shows that investors also have their own playbook and might be disinclined to invest in a company regardless of its potential for greatness.

As an entrepreneur, what counts is not gathering a long list of investors, but to narrow it down based on relevance.

Do your homework

The essence of this is to find out if your potential investors are already backing your competition. The odds that an investor will fund two companies that basically do the same thing are slim to none.

You’d save yourself time and energy that would be better spent elsewhere if you do research on your prospective partners before you pitch.

Consult others

Acknowledging that you need the help of others is a sign of modesty which, in itself, is an invaluable asset. Once you have an investor in mind, consult other founders who had been funded by them in the past.

Getting to know more about the personality, mode of operation, and other relevant information about your potential shareholder would cue you if your partnership will be a ‘match made in business-heaven’.

Dig a bit deeper

At this point, you have to sharpen your investigative skills to know if your investor meets some of your requirements.

Leverage social media networks such as LinkedIn, Twitter, Facebook, as well as search engines to note some common grounds you share and some of their philosophies you don’t necessarily agree with. Doing this would give you additional insight into the person you’re getting into business with.

Use your network

Having decided on an investor you’re almost certain is a good fit for your startup, be mindful of how you approach them.  Don’t make the mistake of sending a cold-mail out of the blue.

Since digital communication transcends physical space, the chances that you and your future investor have a mutual connection are high.

Hence, the strategic thing to do is utilize your network of people who know your investors and are willing to do introduce you to them and even put in a good word for you.

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