Investors can virtually be categorized in two groups. Those who invest for the potential return, these investors usually seek startups in advanced stages and invest a significant amount, and those who invest in entrepreneurs, their ideas and the problems they will be solving. Both investors are expecting a return in the future but at your earliest stages, idea or prototype stage, you are better off working with the second group. Allow me to suggest the two following steps.
With just an idea you are at your lowest chances of receiving an investment. Interested investors will bet on you and your team not so much on the idea. So in order for you to introduce who you are and what you will do don’t start by showing up at their offices wearing a suit and ready to pitch. Look them up, learn about their lives, comment on their posts, retweet their tweets, etc. Bottom line, show them that you exist first.
Next step is for you to meet them casually. See if you could meet them at an event or have a friend introduce you to them. If they like you, they’ll remember you. Few weeks later give them a call and see if you could make an appointment with them. Now you’re ready to discuss your idea.
As I mentioned earlier, you want to work with the second group of investors. Those who see the vision and want to know the pain point or gap that exists in the market and how your idea will solve it. They’re investing in you. You don’t have a product, you don’t have customers, you don’t have a revenue stream, all you have is talent, motivation and commitment so make sure you show that you deserve their trust.
Once you define the problem, your solution and how your team will make it a success, start talking about its market potential and how your product will fit into the overall market. A survey would be great. Not only will it show them what your potential customers think about your solution, it will also reinforce their trust in you. Nonetheless, don’t hesitate to do your own research about the size of the market and more specifically your targeted segment.
Above all, be confident and believe in yourself and your idea. If you don’t believe in it, no one else will. Seeking an investment is like a full time job. Don’t give up and keep in mind that the more you do with your own resources like building a beta version or a Minimum Viable Product, the higher your chances of getting an investment will be.
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