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How to Find and Attract Investors

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How to Find and Attract Investors

Published: April 28, 2010 Updated: May 18, 2012

Finding the right investor to finance your business plan can be a daunting task. Then, once you locate potential investors, convincing them to invest in your business is a whole new challenge. For small business owners who are looking for investors, read on to learn about places to find investors and tips to presenting a winning business case.

Where Do I Find Potential Investors?

The probability of finding the right investors depends on the size of your network. While you network, keep in mind that your average investor is an (retired) entrepreneur who will offers his or her business expertise as you grow and expand your business. Start looking locally and gradually network your way out to maximize time and efficiency.

Community. Your local community is one of the best places to start your search. Try to meet other business owners in your area who know investors. A referral from a trustworthy local business owner increases the chance an investor will invest in you and the chance that you will find the investor a good match.

Business and Trade Organizations. Business and trade organizations are optimal places for networking. With many business owners concentrated in one place, you can meet potential investors and learn about opportunities more easily. You can also look into national and local investing and venture capital groups like the National Venture Capital Association* and the Angel Capital Association*.

Chamber of Commerce. Your local Chamber of Commerce is another resource you can tap into. Ask your representative if they have database of local investor associations or business incubators. You can use this list as a starting point to meeting investors.

Small Business Development Centers. Call the small business development center in your area for information about local investors. Visit SBA.gov to find your local SBDC.

State Economic Development Agencies. Regional and State Economic Development Agencies help new and established businesses start, grow, and succeed. Check if they can refer investors in your state or local area. Contact your State Economic Development Agency here.

How Do I Win Investors Over?

Assuming that you found a potential investor, how do you convince them to invest in your business? The main strategy is to sell, sell, and sell. Instead of asking for money, explain how investing in your business is to their benefit. Thoroughly research your business and potential investors, and be prepared to answer questions about your long-term growth plans. Lastly, take these sales pitch tips with you to win investors over.

Give a Good Reason to Invest. Why does the investor invest? Is it mostly for monetary gain? Do they enjoy investing in new and exciting businesses? Do they sympathize with businesses with certain causes like those that are environmentally or community-friendly? Do they want to be actively involved in the business? Fine tune your pitch according to what the potential investor wants to hear.

Sell Your Business Plan. After you convince your potential investors to hear you out, you must prove that your business plan is strong and convincing. Make sure you have a detailed and well-written business plan to show you have done your homework. Include financials and market research.

Show Them the Money. Detail how your business will generate profit and how it ends up in their pockets. Ultimately, all investors want a solid return on their investment, so make sure your sale makes good business sense.

Need More Guidance?

If you are still confused about financing your business through investors, you can look at the following guides and resources for more information and assistance.

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Thank you! I needed this :)

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