Business

5 Tips on How to Attract an Investor

Any startup needs money like air. In the early stages, attracting investment is the biggest headache of all startups. Usually, no one wants to believe even the most wonderful idea and only a few investors are ready to be the first. In this article, we will talk about raising funds for innovative projects.

1. Answer the Three Main Questions

It is necessary to objectively evaluate the idea of a future project in three key parameters:

  • What problem is being solved?
  • How exactly is it solved?
  • How to get revenue?

Only after making sure that your idea meets these requirements, it is worth moving on to the stage of preparing a business plan. A first reliable way is to borrow ideas and trends. This method allows you to significantly reduce your own risks and therefore the risks of the investor.

The second important point is the fast creation of a beta version or prototype of a product with a subsequent launch. As practice shows, even a “stripped down” version is enough to understand if there is a demand for a product and what needs to be improved.

2. Know Places Where Investors Gather

The current process of finding an investor has become much easier than before. In addition to an impressive number of different business incubators, investment funds, private investors, a lot of thematic events have appeared. Their format allows startups to quickly get the required feedback, chat with experts, or get useful contacts and connections. In addition, many contests are being held where the winners receive financial support from investors.

3. Do Not Overdo with the Documentation

The issue of documentation for many startups is very acute. Many are lost after seeing impressive lists of documents required by the investment fund. But at the first stage, a sufficiently competent and capacious presentation, which includes all the information that investors need and a map of expenses and income is enough. When doing this don’t be afraid to ask for help strategic planning expert.

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Investors are experienced people who are prone to soberly evaluate incoming statements and numbers. Optimistic forecasts of startups, they immediately divide by ten.

4. Combine Perseverance with Flexibility

Many startups when starting their way in business have a poor idea of what changes this step can bring to their lives. Meanwhile, psychological readiness and maturity are one of the key success factors. It is no secret that many projects survived almost exclusively due to the unshakable faith of their founders in their ideas and inexhaustible persistence on the way to their goals.

It’s worth to be ready for constant changes and instability, including financial. That is why a startup founder must necessarily have two qualities as perseverance and flexibility. At first glance, they may seem mutually exclusive but it is very important to find balance and combine them in your work.

5. Learn to Look at Your Project from the Side

The main mistake is an incorrect assessment of your own idea or product. In this matter, objectivity is extremely important, since a person who is in love with his idea is sometimes not able to realize that it is actually useless. It can be very difficult to distance yourself from a personal relationship with a project, but learning how to do it is simply necessary for those who want to achieve real success.

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