As a startup, the amount of capital you raise in the early stages of your company’s life cycle can have a huge impact on the success of your business long term. Without raising capital. it would be difficult to get anywhere. Some startups can get by with community support by obtaining funding through crowdfunding sites such as GoFundMe or Kickstarter. But for emerging businesses with higher-end ideas that require grander investments, this form of funding simply won’t cut it.
Startups of this caliber need venture capital. Venture capital (VC) firms help finance early stage startups by pooling investment dollars from other investment companies and pension funds and investing them in businesses that have the potential to succeed long term. These pools can reach the multi-millions – a dream for any innovator looking to bring their ideas to market.
But how do you get these VC firms to invest in you? We’ve gathered some tips for getting those initial investors:
Understand how to pitch your company
If you want to impress a VC firm, you need to be able to quickly and effectively pitch your product. Before you start reaching out to potential investors, you need to have your elevator pitch prepared. An elevator pitch is basically a condensed story about your company which aims to convince someone that your startup is the next best thing. In your pitch, you should highlight your business’s biggest selling points and really show that you know your product and your audience well. A successful elevator pitch is conversational and natural but full of impressive facts and numbers that showcase the potential profitability of your company. Take the time to craft out your startup’s pitch and practice delivering it so that once you’re able to come face to face with VC investors, you’ll be cool, confident, and ready to amaze.
Know who you’re pitching to
It’s best to avoid using “in-bulk” communication and keep your pitches interesting. Before pitching your business idea to a venture firm, take the time to research who you’re pitching to. Sources such as the National Venture Capital Association can help you learn more about the VC firms that are out there and personalize your pitch to cater to their interests. Creating these connections can help strengthen the bond you create with venture capitalists, providing a more seamless experience from forming your business to finally going public.
There’s no better way to win investors over than getting to know them personally. VC firms are getting emails from thousands of potential startups, so it can be easy to go unnoticed. Getting to know the right people and having face-to-face interaction with them can help you to break through the crowd and get your business the recognition it deserves. Here at Grasshopper, we want to help you get these kinds of interactions, which is why we’ve created Grasshopper Connect, an exclusive, curated community of investors from our network, open to any Grasshopper startup client.
Don’t be scared of rejection
Regardless of the amount of preparation you put in, there is still unfortunately a large risk of not getting your initial investments straight away. In fact, VC firms reject almost 99% of the proposals they receive. Don’t let rejections get to you. Just because one firm said no doesn’t mean they all will. Be patient, be persistent, and make your dreams a reality.
By Michaela Lenahan in Startups