Accounting & Finance
How To Choose Investors For Your Startup Business
You’ve got an idea for a startup. Now what? How do you find investors? In this article, we’ll cover everything from finding the right investor to getting funding. Plus, a look at how the top five market cap brands started.
Startups are businesses that are still in development. They’re often small companies that focus on creating new products or services. Startups are businesses that are new, small, and innovative. They often involve technology, marketing, and other creative fields like NFTs.
How Can You Choose Investors For Your Startup?
There are a few options for funding your startup, and it’s not right just to choose the source that is prepared to give you the most money for little in return. There is a process to go through so your startup has the best start and also access to investment as and when your small business needs it, including:
- Choosing the right investors
- Which type of funds is best for your startup business
Start with the right investor type
While you may believe your only option is your bank, there are more sources of funds for startup businesses. Typically business investors are categorized into the following types:
- Angel investors
- Venture capitalists
- Private equity firms
Angel investors
Angel investors may be your best option if you need a small sum to commercialize your idea. Angels tend to invest smaller amounts of money than another source of funding – venture capital firms.
Venture Capitalists
Venture capital firms typically provide more financial support to startups than angels.
Private Equity Firms
Private equity firms buy up existing companies and then sell them off as part of a larger business strategy.
Look at funding sources
Start by looking at different sources of funding. If you’re just starting out, you might not have much money to invest – well, don’t let this put you off starting your business. There are funding sources you can consider, including:
- Applying for grants or loans through government agencies
- Reaching out to family or friends
- Peer-to-peer lending sources
- Crowdfunding platforms
These funds are often available to small businesses. Other options include crowdfunding platforms such as Kickstarter or Indiegogo.
Crowdfunding allows people to donate money to projects they believe in.
Do market research
Once you’ve found potential investors, you must understand them and their requirements; consider the following questions.
- What kind of business model will work for them?
- Will they prefer equity or debt financing?
- Are they interested in a small or large company?
This means doing market research and answering more questions. Ideally, it’s you choosing your investment partners, and to give your startup the most interest from loan providers, you need to articulate to interested parties everything about your startup, including:
- What does the industry look like?
- Who are the competitors?
- Where will you sell your product?
- What kind of customers are there?
Present your answers in a business plan or, better still, call it a pitch deck. Presenting your business idea and how you plan to commercialize it so it goes from ground ‘zero to hero’ doesn’t need to be perfect, but first impressions count. Your pitch deck should be visually appealing and customized for investors.
5 Startups That Have Made It
From the world’s largest social network to the next big thing in artificial intelligence, these companies are poised to change the way we live our lives. Every business started out as an idea, including these top 5:
- Alphabet (Google)
- Apple
- Amazon
- Netflix
In 2016, Facebook became the first company to reach a market capitalization of more than $500 billion. That means its value was more significant than the total worth of every other publicly traded company combined. Facebook acquired Instagram for $1 billion in 2012. Today, Facebook owns WhatsApp, Oculus, and Messenger.
Apple
When you think of Apple, your first visual may be the iconic Macintosh 128k, which came out in 1990, and let’s face it – it was an incredible design that took the desktop market to a new level.
However, Apple is better known for being the leader in the smartphone industry since 2007. Steve Jobs introduced the iPhone; since then, Apple has sold more smartphones than any other manufacturer. However, in 2017, Google surpassed Apple as the number one smartphone seller, and Samsung is today’s leader. Apple continues as a design leader, releasing the iPhone XS in 2018, featuring an edge-to-edge display and facial recognition technology.
Plus Apple will always be a favorite with designers – who doesn’t love the iMac 24? It’s our favorite. 🙂
Netflix
In 2016, Netflix was valued at $US100 billion ($A144 billion), while Amazon Prime Video had a market cap of only $US10 billion ($A14 billion). That means Amazon Prime Video is worth almost four times as much as Netflix. However, despite losing 1 million subscribers since April 2022, Netflix still has 220 million subscribers and is the market leader in streaming subscription services.
Alphabet
In 2016, Alphabet became Google’s parent company and its subsidiary, Nest. This move allowed Alphabet to expand into new markets, such as smart home devices and internet access. In business, we’re all more familiar with the brand Google for its search engine and how it impacts SEO. Plus, all the free Google tools for everything from workspace docs to search engine console insights.
Final Words
The average life of a small business is less than five years. Lack of investment is a core reason businesses fail. Create a startup that is well-funded for years to come with investors you’ve chosen to support you every step of the way.
Preparation is crucial to do this successfully. Plus, you’ll need a top-rate pitch deck. Engage a consultant and marketing expert to assist with the contents and presentation of your pitch deck so you get off to a great start.
