How to Find Investors for Small Business

Are you planning to form your new small business?

Kickstarting a brand new one and helping it reach its growth mode requires a lot of time and money. There is no need that the entire funds must come from your side (i.e., from the owner) or through bank loans. Every business needs sufficient capital to reach the next level and grow.

Small business refers to a privately owned corporation or sole proprietorship. It usually will have only a little number of employees. Management and operational tasks of such a company are handled by its owner. To build a healthy and thriving company a huge amount of capital is required along with the money bought into it by the owner. This is when you will need to find good investors to give your business a lift up.

Who are the Possible Small Business Investors?

Small business investors are those people who are specialized in financing businesses. Good investors always try to find out businesses that are functioning under a specific industry and a model in which they specialize. Investment is not something done because the person wants to support your business but to get returns from it. Therefore, investors are people who expect a certain amount in return for the money they expend in the business.

Many investors are also people who have their own companies and can provide informed perspectives to small businesses. They usually do not get their heads on to your day-to-day affairs, but can help get access to greater networks and resources to the company. Given below are some of the available small business investment options.

Friends and Family Members

The next option to fund your small business in the stage is through your close friends and family members who are financially healthy. They are true believers who have faith in your ideas and want to help you in becoming successful. It will be easier to convince those people who know you well to invest in your idea.

Crowd Funders

This type of small business investment option opens up funding opportunities to almost everyone in this world. Crowdfunding is usually done through the internet on various social media platforms and other funding sites, by pitching up the idea of your business.

Business Incubators or Accelerators

A business incubator is a working space created to offer new businesses access to resources needed for its effective functioning under a single roof. While a business accelerator is a program that delivers growing businesses access to mentors, investors, and other supports that enable them to become sound and self-supported.

Angel Investors

They are financially healthy individuals who finance their own money into startups, usually in exchange for equity shares. Angel investors are not firms but individuals who tend to invest smaller amounts of money into the firm. They fund a business with an expectation to get a high (ROI) return on investment.

Venture Capital Investors

This capital is a form of personal equity that is generally financed either in exchange for equity capital or convertible notes. These types of small business investors are a part of the private sector and will have a large amount of money to be drawn from many sources.

Venture Debt Providers

It is a funding option available for those businesses already backed by venture capital. Venture debts are usually a kind of loan, which you will have to pay back even if your company is not in profit, without giving up any equity shares. The terms of repayment may vary based on the situation. But on average, the repayment period is 3 years. Failing of which, may even end up selling your business itself.

Small Business Administration

When you are looking for a smaller amount of investment, microloans may be the perfect option for you. The (SBAs) Small Business Administration is a public entity, offering programs that connect small businesses with private lenders to take loans.

Where to Find the Investors for Small Businesses?

Broadly speaking there are several ways to find investors to fund your small business. But the process to find them requires time, effort, planning, and professional touch. When your business is ready you can choose from any one of the following ways to get the funds required from the investors.

Start-up Launch Platforms

Many companies have established platforms that offer the required information and assistance to launch a small business. This also provides ways to connect with the investors efficiently.

Trusted Introductaionds

Find out people with whom you can present your business idea and see if they introduce you to an investor or a network where you can find them.

Strategic networks

Look for possible people who can fund your business inside your alumni network. There may be angel investors, alliances, people who have a connection with others who can offer advice on how to find one.

Industry Conferences and Events

If you are not able to find an investor network, try to make one through conferences happening in the industry, recommended events, or summits.

Friends and Family Members Get-Togethers

If they are not comfortable with lending money to the company. Your close friends and family members can help with finding investors or can become one themselves.

How Investors Help Small Businesses?

The value of an investor is far beyond the money they fund in the small business. Investors who have experience working in the industry in which your small business is functioning will also provide the knowledge and insights that will help grow your business. They can also help gain suitable connections with the right people, who were out of reach earlier.

Key Takeaways

To conclude I would like to say that every small business must find people who can fund their business. There are ideal people ready to invest in your small business’s growth.
A small business is a privately owned company, managed solely by the owner, and will have a limited number of employees. Starting one involves a lot of funds and time to reach the growth phase.
Small business investors are individuals or groups who are specialized to fund newly set up companies. They can even provide information and strategies to help your company grow.

Below are the small business investors from whom you can choose one

Close friends and relatives
Crowdfunders
Business incubators or accelerators
Angel investors
Venture capital providers
Venture debt providers
Small Business Administration (SBAs)

This is where you can find the small business investors:

Startup launch platforms
Trusted introductions
Strategic networks
Industry conferences and events
Get-togethers with friends and family members

Investors help small businesses in the following ways:

They help small businesses get the required funds
Experienced investors also give good insights into the growth of the company
They provide suitable strategies that help the smooth functioning of the organization
They also help gain suitable connections for the business