The Inbound Way of Acquiring New Investors for Your Startup Business

As we all know, at the core of every inbound strategy is the primary objective of attracting the right visitors to do business with a particular company. While this tactic is mostly used in marketing to get the attention of consumers, it can also be employed to successfully acquire new investors for your startup business.

However, much like in marketing where it is essential to define your target audience—it is crucial to know your prospective investors. In clearly defining the right investors, you can effectively write an incredible elevator pitch tailored to them.

While today’s startup scene continues to reach new heights and evolve into an exciting landscape, it is poised to grow more and more competitive in the coming years. In facing stiff competition, getting support from the right investors has become harder than ever. Stay ahead of the curve by understanding the differences between angel investors and venture capitalists and make the right decision in funding your startup.

Angel investors and venture capitalists

Two of the most common funding options to help startups get off the ground, angel investors and venture capitalists surely have a fair share of similarities. While they both cater to the financial needs of startups, knowing the main factors that separate them is crucial in deciding which is the right source of funding to focus on acquiring.

● Investor background and expectations

Although they can be a part of an investor group, most angel investors are powerful individuals. Often, angel investors are influential people, business thought-leaders, high-ranking executives, or entrepreneurs themselves. They invest their own money to fund a startup they believe in, in the hopes of gaining a favorable return on investment and effectuating positive change in the world.

Since they are putting their own money at stake, they expect to be given an opportunity to play an active role in growing the business—oftentimes as mentors who offer help, insight, and recommendations.

On the other hand, a venture capitalist could be an individual or a firm. They typically don’t use their own money. Rather, they pool funds from pension funds, investment companies, and big corporations to invest in businesses. They often require to be a part of the Board of Directors.

● Average amount of investment

To help decide the right investors to approach, you’ll need to know the average investment amount they usually offer.

Since angel investors invest funds from their own pockets, they can only do so much. The average offer from angel investors is around $25,000 to $100,000. One of the downsides to consider when working with angel investors is that each has a limited financial capacity, so you might need to work with several angel investors to get your business up and running.

In contrast, because venture capitalists pool funds from different sources, they can invest more money into businesses they are interested in. On average, they can offer as much $7 million in a company.

● When they normally invest

Knowing when angel investors and venture capitalists usually invest is also vital in defining your startup’s target investor.

As angel investors are willing to take more risks, they normally look for businesses in their early stages. On the contrary, since venture capitalists don’t use their own money, they are required to reduce risks—for this, they tend to fund more developed businesses that have proven themselves in the ever-competitive market. However, depending on their goals and focus, there are still numerous venture capitalists who invest in startups with remarkable growth potentials.

7 Inbound Ways of Acquiring New Investors for Your Startup Business

We are living in a time where startups dominate the economic landscape. A lot of small, early-stage businesses today offer attractive opportunities to angel investors and venture capitalists. Although, due to the competitive nature of the industry, it is not enough for startups to have a compelling growth plan.

While some businesses started with investments from family, friends, and colleagues, gaining the trust of established investors should remain your top priority. This will allow you to successfully secure sufficient funding to help jumpstart your new business.

Here are the most common inbound ways proven to get the attention of the right investors:

1. Invest in branding

As valuable as it is in actively marketing any business, branding also plays a key role in attracting and acquiring investors. Since branding is a powerful tool in communicating your brand’s identity, personality, and core values, it helps establish your reputation. Having strong and compelling branding can help demonstrate your startup’s potential growth—laying a good foundation to help boost investor confidence.

To build a solid branding strategy, make sure it is consistent, from corporate colors and design aesthetics to brand message, tone, and voice.

2. Have a powerful online presence

Indeed, technology brings a wide range of perks to business. Nowadays, as it continues to bring people closer, it’s much easier for businesses to get their message across and reach a myriad of potential investors.

In the modern, digitally-driven world, having a powerful online presence can aid in making your startup stand out from the crowd and appeal to your target investors. Build a successful brand in the digital space by being on multiple social media platforms, including Facebook, Instagram, LinkedIn, and Twitter.

Also, amplify your online efforts by investing in a professionally-built website with useful information, engaging content, and irresistible CTA. While it can’t immediately convert investors, it can enable you to showcase your passion well beyond the confines of your brick-and-mortar store.

3. Build a solid community

Get noticed by your prospective investors by having a solid, passionate community. This way, you can organically reach the right people through messaging, communication, and one of the most effective yet free marketing techniques—word of mouth.

Much like in marketing, word-of-mouth tactic bridges brands and their target audience. When employed properly, you can effortlessly exhibit your startup’s strength and communicate your brand’s main business proposal. In piquing the curiosity and attracting the attention of your target market, you will surely reach interested investors eager to offer you capital.

4. Host or attend industry-relevant events

Visibility is critical in raising capital. Hosting, sponsoring, or simply attending industry-relevant events can do wonders in boosting your startup’s visibility. In this way, you can meet and engage with active investors. Eventually, when the opportunity arises, you can subtly and casually pitch your startup and entice them to look into your business proposal.

5. Have a business plan structured for investment

While a compelling and innovative business idea is essential, having a scalable company is vital when attracting and converting potential investors. To help demonstrate the potential of your startup and impress investors, make sure to consolidate essential aspects of your business.

In setting reasonable targets for your new business and having clearly defined goals, you can ultimately present detailed marketing and growth plans, financial projections, and the specifics of how your products and/or services aim to address the pressing problems your consumers currently face.

6. Present a compelling reason to invest

Both angel investors and venture capitalists invest in businesses that have a convincing potential to dominate the industry it will operate in in the hopes of gaining a favorable return on investment. One of the surefire ways to convince these investors is to know them—including what they care about the most.

Some investors are interested in developing a new, ground-breaking technology to sell to big corporations while others are concerned about launching sustainable programs that aim to support communities in their fight against malnutrition.

Other than establishing a trustworthy brand and securing the future from the inside out, it is crucial to define your target investors and create an elevator pitch tailored to them.

7. Offer an opportunity to be actively involved

Since it’s not just about putting money into an innovative idea, angel investors and venture capitalists expect to be given an opportunity to play an active role in the businesses they invest in. That said, you should be willing to offer your investors a way to participate and be involved in developing your startup.

As angel investors are often high-ranking executives or entrepreneurs themselves who have been in the industry for years, they are more likely to want to take on the role of consultants or mentors. With their deep industry knowledge, they can offer insightful tips, advice, and business training, among others.

Some investors however, typically venture capitalists, would require you to give them a seat at the table and become a key member of the Board of Directors. As such, you should be prepared to agree to this or have a convincing counteroffer.

Attract capital with a sound inbound strategy

In setting up and getting your startup off the ground, it is necessary to work with established investors by integrating the aforementioned foolproof inbound tactics into your overall business strategy. However, there is more to attracting capital—matching your business with the right investors is vital to have a strong foundation for your startup. When vetting your potential partners, make sure to get to know their interests and business philosophies to avoid unnecessary complications later on.