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Where to find an investor for a business

Where to get money for a startup - such a question arises after the emergence of a business idea. After all, not always a novice entrepreneur has a start-up capital, which will be enough to implement the idea. Therefore, he considers several options: borrow from relatives or friends, take a bank loan or attract an investor.

Where to find an investor for a business and get funding for your business idea


The last option is the most tempting for beginners, because unlike a loan, monthly interest payments, collateral and guarantors are not needed. But where to find an investor for a business, how to interest him and make him believe in the success of the planned enterprise?


It must be remembered that many people view investments as passive income. Therefore, first of all, they are interested in how stable it will be and what risks exist. The second point that entrepreneurs should take into account is that in most cases the investor is a partner, not a lender. Therefore, business relations should be built on a mutually beneficial basis, without hiding financial results and business plans.


Where to start searching

Before looking for a source of funding, you need to make a competent presentation of a business idea that will highlight the main points:


  • product - its demand, uniqueness, competitiveness;
  • financial investments - initial, current, volume and payback period;
  • profit - monthly, annual with detailed calculations;
  • risks - organizational, competitive, production, etc.;
  • prospects - the possibility of developing and scaling the business.


In fact, this is the same business plan with which the development of any project should begin. The more competently it is drawn up, the more reliable the calculations in it, the higher the chances of your business idea to get funding.


But before you get money for a startup, decide on the form of future cooperation. Think about which investor is more profitable for the project. This decision depends on several factors:


  • Investment size. You need the full amount or partial, which will go to expand production capacity, purchase equipment or materials.
  • Entrepreneurial experience. The speed of development of the project depends on it, which means the payback period and profit. In addition, experienced businessmen are more likely to succeed.
  • Product uniqueness. Are you going to sell a product that is already familiar to the audience, or do you want to launch a new product that is almost unknown to anyone.

Where to find an investor for a business and get funding for your business idea


Based on these criteria, you can choose from two options for investors. The first is an investor who will receive a percentage of the profit, i.e. passive income, practically without interfering in economic activity. The second is a full-fledged partner with its share in the business.


After that, you can proceed to active search. But where to find an investor for a business? This question will help:


  • Experienced entrepreneurs who are ready to share their experience and give recommendations.
  • Specialized portals are platforms for interaction between startups and investors. The former present their projects, the latter choose and invest money.
  • Economic communities, exhibitions, forums, business conferences.
  • Companies that specialize in investment matters. They know where to find an investor for a greenfield business and help entrepreneurs meet interested people.
  • Investment funds - private and public. Most often, they are willing to invest in an existing business that plans to expand. Startup competitions are often held - among the projects the most promising one is selected.
  • Venture funds. They consider interesting projects with a high level of risk in the IT industry and in the field of science.


After that, you should choose a method of financing.


Funding methods

There are two main types of funding: internal and external. Internal means investing your own money and resources. But if the start-up capital is not enough, external investment is necessary - money raised from outside or borrowed funds.


Among the most accessible methods of how to find an investor to implement a business idea and raise money, there are 5 ways to finance projects.


Joint-stock company

It implies the issue of shares and their sale among potential investors, which can be both employees of the enterprise and other interested parties. Thus, the company raises money, and investors become co-owners. Their income determines the liquidity of the shares, which depends on the success of the company, its influence on the market.


franchise

One of the best ways to find an investor for a small business. Banks and financial institutions borrow money at interest. But when buying a franchise, this happens easier and often on preferential terms.


The franchisor already has an entrepreneurial history, market reputation, financial performance and development strategy. Therefore, banks have no reason to be afraid that the business will fail and the borrower will have nothing to pay interest. Loan repayments are often deferred for several months, which for a novice entrepreneur is equivalent to an interest-free investment.

Assistance from the state, grants and competitions

State budget financing programs are run by various committees to support start-up entrepreneurs. Often they are competitions in which dozens of candidates take part. Participants submit their business plans for consideration by the commission. Grants are provided free of charge, but the entrepreneur must systematically report on his activities.

Crowdfunding

This is a form of collective investment that allows you to decide how to get money for a startup. It involves the financial support of a certain idea by completely different people. Mainly suitable for startups and social projects.

Fundraising is carried out on special crowdfunding sites, where the idea is put up, the amount of investments and the spending plan is signed. Information about the receipt of funds is publicly available. Anyone can become an investor. Many people donate small amounts to help a newcomer raise money for a project.

Private investors

When thinking about where to find an investor for a business idea, seek help from relatives or acquaintances who are ready to finance the idea in exchange for a percentage of the profits. Often, a completely outsider who is interested in the project can become a contributor. At the same time, both parties must necessarily discuss all the nuances before concluding an agreement, as well as formalize partnerships.

This is beneficial for both the entrepreneur and the investor - the document clearly regulates the relationship of the parties, shares and payments in case of success or failure.

How to attract an investor to your business

How to attract an investor to your business


To find someone who will be interested in your project and invest in it, ask yourself the question: why is your startup worthy of attention and trust? The uniqueness of the idea, its economic potential are the determining factors for the investor.

In addition, it is important how the entrepreneur presents his business idea, as well as:

  • how well he knows his product and believes in it;

  • life and entrepreneurial experience of a startup;

  • what steps have already been taken to implement the idea.

It’s not enough to find where you can get money for a startup, you need to be able to talk about the project in such a way that potential partners are interested in it, and they want to invest in it.

How to form a partnership

How to form a partnership


The conclusion of a cooperation agreement is the starting point of financing. It reflects all the basic information: the amount of investment, the size of the equity participation, the method of obtaining income, the reporting procedure and other important points.

In order not to find yourself in an unpleasant situation, involve professional lawyers in drafting the contract. They will help to make everything as profitable as possible for both you and your partner. A competent document will help to exclude litigation in the future.

One option is to contact a business broker. Such companies help in various matters, including the search for reliable investors.

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