Attention All Startups: How to Land Investors in Your New Business

It’s often difficult for startups to find the investors they need because their product or service has yet to be proven in the marketplace. Investors like to see some sales figures to show economic viability before risking their money on a new venture. Without sales it can be hard or even impossible to demonstrate that there will be future revenue. Another challenge startups face when they need to acquire funding is the difficulty in predicting how consumers will react to the product without first putting it in front of them. Marketing efforts may be wasted until consumer feedback is gathered, but it’s almost impossible to get that feedback without marketing first.

DRTV Advertising

A tried and true method of   attracting investors to your new business is DRTV, or direct response television.  You may know DRTV better as infomercials. DRTV advertising works by putting a product in front of a consumer audience via TV.  These advertisements are peppered with encouragement for the viewer to take action. That action could be to visit a website and learn more about the product, or it might be to text a code to get SMS messages about the product, or even to simply call and purchase the product.  So how does this help you secure investors? First, the startup connects with a DRTV channel to showcase their product to consumers on TV. Responses from prospective customers can then be measured and judged based on how many people visit the product website or call in for more information. This data can then be incorporated into the investor’s packet and used to demonstrate a market interest in the product. Best of all, this method doesn’t require the startup to start with a large inventory of goods to start.

Crowdfunding

Crowdfunding is a relatively new but effective means to raise funds for a startup. Simply put, it involves asking for funds from the general public, mainly through social media and online platforms. There are various crowdfunding models and the type selected depends on your product or service and your goals for growth.  Key differences between crowdfunding platforms include when and how you can get your funds. Some allow you to make interim withdrawals, while others hold funds until the entire goal amount has been contributed. Another slight difference is the fee taken out of your funds, which is about 3%. Some platforms charge an additional fee of about 5%. The downside of crowdfunding is its public nature. If you want to succeed in funding your second act this way, you’ll need to work hard to publicize your campaign on social media or spend money on other forms of online advertising to extend your reach. Here is a list of the top crowdfunding sites to consider:

  • Kickstarter
  • Go Fund Me
  • Indie Go Go
  • Fundly
  • Just Giving

As you can see, there are creative ways to fund your startup that don’t involve wiping out your savings. You might decide on one of these ideas or implement a combination of both. Either way, don’t give up on   starting your new business endeavor. With the right approach and funding source, it can be done!