Are you wondering how to find investors for your business?
You’ve already reached out to friends and family, but they couldn’t help. Or even better, your start-up has grown so much you need bigger funding.
Here are seven popular ideas to find investors for your small business.
Let’s start with the most effective way to get small business investors: Warm introductions.
A warm introduction is when you have an existing relationship with an investor or when someone with a current relationship makes an introduction for you.
As a founder, you probably know fellow entrepreneurs who know investors. So reach out to your network and ask around.
Warm introductions make a significant difference in your chances of getting funding. They act as an endorsement of your character and value, depending on the person making the warm introduction, of course.
Potential business investors are more interested if they hear from someone they already have a solid relationship with. Data from VentuRank shows companies with a friendly introduction to a VC had a 26% chance of getting to an investment committee and a 4.6% chance of getting funding.
Companies without a warm intro only had a 1.19% chance of getting to an investment committee and a 0.38% chance of receiving funding.
If you’ve found someone who can introduce you, help them along by crafting an introduction email for them to forward to your person of interest. It helps your reference provide context and convey their excitement about meeting you.
Include these six elements in your email
1. Start with a clear subject line. For example, “Introducing (Company Name) and (an attention-grabbing hook).”
2. Thank the person for introducing you and specify which partner you’d like to connect with.
3. Include your ask: Usually a quick call or a meeting.
4. Add your company elevator pitch.
5. Attach your pitch deck.
6. Provide contact information.
If you have no connections, go to an industry event or a start-up conference. Virtual events have exploded in popularity in response to the pandemic, making it easier to find start-up investors without the need to travel.
Start-up founders and angel investors frequent these events. Find which companies your target investor has invested in and speak to their founders. They’re often easier to access and can refer you to that investor.
Even if you don’t meet a suitable investor at a networking event, someone you meet may know an investor and introduce you to them. This new relationship could lead to a warm introduction if things go well.
Warm introductions are the best way to get in touch with investors, but if there’s no way to get one, you can still try cold emailing.
Even though the success rate with cold emails is a lot lower, you might still stand a chance if you follow these best practices.
Keep it short: Your email should take no more than 60 seconds to read. Break up any walls of text into easy-to-read bullet points.
Include specific numbers where possible: Exact numbers and metrics are more convincing than buzzwords like skyrocketing growth.
Have a clear subject line: Be clear about what you offer. You may add some intrigue, but VCs won’t open clickbait emails.
Describe what your company does and show traction: Talk about your solution, the problem you’re solving, competitive advantage, information on your team growth and traction. Investors will be more excited to meet with you if you can showcase your business wins and milestones.
Personalise it: Make sure your investor covers your company’s industry. And include a few words about why you want to work with them.
End with one brief closing sentence with a clear ask: Decide if you’re asking an investor for their advice, an investment or a referral and tailor your ask accordingly. It should be something an investor could reply to in one sentence.
Attach your company profile and pitch deck to the email: If there’s interest, investors will want to know more. Be one step ahead and add your pitch deck as well as any other related information.
Immediately ask for an in-person meeting: Focus on sparking the investor’s interest, so they want more information from you. Make a connection before you ask more of their time.
Send multiple follow-up emails: Maybe, they forgot to reply. But be reasonable. Wait a few days between emails, and don’t send more than three or four. Instead, use tracked opens to gauge their interest.
Overuse business jargon and acronyms: Don’t show how smart you are by using complex words. Show your intelligence by explaining your business in simple terms.
Read more: Toba Capital’s helpful tips on structure and mistakes to avoid in your cold email here.
Start-up incubators come with nearly everything an early start-up needs, including access to potential seed-round investors. They invest as a company and are more likely to offer reasonable investment terms to start-ups.
This isn’t the only benefit of incubators, though. They typically come with a structured programme to guide you through the process.
Additionally, incubator programmes organise demo day events or pitch nights. These are great opportunities for start-ups to pitch to a crowd of investors, expose their company and build their network.
Furthermore, endorsement by a well-known start-up boot camp provides credibility to support future conversations with investors.
If none of the above work for you, or you’re eager to start right now, social media is a great place to search for small business investors.
Start with these three popular platforms.
1. LinkedIn: The most used social media platform for institutional investors. More than 50% of investors use LinkedIn for professional or financial purposes.
2. Crunchbase: Use Crunchbase to find active business investors who invest in companies like yours. You can also track business competition and benchmark your company metrics.
3. Twitter: Use curated lists and topics of interest to find investors. Twitter also has an advanced search tool.
The tips below apply to all social media platforms, but we'll use LinkedIn as an example.
Your profile is the first impression for any potential business investor. Upload a good profile photo and a header image that briefly describes your company. You should also add an updated company profile and highlight key business accomplishments. Finally, it’s worth mentioning you’re looking for funding.
In the Company field, type in “Capital,” “Venture,” “Holdings” or “Investors.” Most venture capital firms use these keywords in their professional title, and private investors use the term “Angel Investor” or “Investor.”
Narrow down potential investors by target industry, stage and location. Investment funds typically specify whether they invest in seed stages or Series A and beyond.
When you’ve found potential investors for your company, reach out to make an initial connection. Avoid pitching your company at this stage, as it’s a sure way to get your connection request ignored and blocked. Instead, work towards building a relationship.
Then, send them a personalised InMail message.
Many business investors don’t just accept anyone as a connection, so send an InMail over a connection request. If the investor is part of a mutual interest group or shares a contact with you, try asking them to introduce you instead.
If there’s a positive response, keep building the relationship. Comment thoughtfully on what the investors share and stay in touch until the time has come to introduce your company properly and announce that you’ll be raising funds.
If you can write well, why not document your start-up’s journey on a blog?
Writing on the Internet is one of the most substantial passive assets you have to strengthen your personal and company profile. As such, it’s a great way to attract attention from potential investors.
By openly sharing your start-up’s story, writing about the industry and the problem your start-up solves, investors get a glimpse into how you work and think. Thoughtfully written pieces may even be conversation-starters.
If you don’t have your blogging domain, Medium and LinkedIn are free writing platforms that put you in front of a targeted investor audience.
1. Nathan Barry, founder of ConvertKit
2. Aytekin Tank, founder of JotForm
4. Kate Kendall, founder of CloudPeeps
5. Danielle Morrill, founder of Referly
Tip: Investors write on LinkedIn or their blog too. Leave thoughtful comments and engage with their posts on social media. This can help you get noticed and provide a lead-in to start building a relationship with these investors.
Crowdfunding campaigns are great to find investors if:
If you’re not a consumer-facing business but still want to consider crowdfunding platforms, have a look at these platforms that help match start-ups and small businesses with investors.
While there are many investors, finding the perfect match is going to take time. Many investors won’t be prepared to invest in your start-up, and others might not be the type of people you want to work with.
Therefore, you need a list of at least 60 investors before you start reaching out. In Aspire’s investor database you can find a comprehensive list of start-up investors in Southeast Asia.