It’s often said that finding investors for your startup can be difficult. But there are actually many options available to you, depending on what you’re trying to achieve.
For an entrepreneur who is looking to raise capital to fund their company’s growth, they may find it easier to approach established industries or businesses in their area for money. If you’re looking for capital to fund a new product or project, you may find it easier to approach smaller, more agile start-ups who are looking for early funding. There are many different kinds of investors, and knowing where to look is the key to finding the right one.
Sell a Sharesale
One of the most popular routes for an entrepreneur is to approach a crowdfunding platform like Sharesale and raise money from investors who want to get involved in your business. With a Sharesale investment, you’re offering a piece of your company to interested investors in return for their money. The catch is that you have to sell your share of the company for a set amount — although the price is negotiable. This gives you the flexibility to negotiate and is often a preferred choice for startups who are just looking for an initial injection of cash.
Crowdfunding can be a bit of a hybrid between a registered investment company and a venture capital group. On the one hand, you have the ability to raise capital from a large number of people with just a simple solicitation. On the other hand, you have the flexibility to structure your deal as you see fit without the need to answer to a group of people who don’t necessarily have expertise in business.
If you’re looking for a more established group of investors who have lots of cash to invest and don’t mind putting in some of the upfront work, you may want to consider traditional venture capital. With venture capital, you’re searching for a group of investors who will provide you with a lump sum of money in return for a significant slice of your business. The difference is that with venture capital, you’re trading long-term growth potential for short-term money.
Venture capitalists often have experience in investing in emerging industries and businesses, as well as in startups. They’ve also typically worked with larger companies who can offer them more opportunities for success. As a result of their deep industry experience, they often have a clear picture of how a new product or service will perform in the marketplace and can offer guidance on whether or not it’s viable. They may also help you navigate regulatory requirements and can offer advice on how to structure your business to fit existing legal frameworks. But despite all this, venture capitalists are still entrepreneurs who must operate within a business, and you must satisfy both their need for a strong return on their investment as well as your need for growth.
If you’ve read this far, you may be wondering what type of investor you should seek out. If you’re looking to fund the initial development and purchase of your new product or service, you may benefit from the expertise of a venture capital group. But if you’re looking to expand your business quickly, you may want to consider an investor who is more closely aligned with your customers. Hybrid investors bridge the gap between venture capitalists and traditional lenders, offering you the benefits of both worlds.
Unlike a traditional venture capital partner, a hybrid investor allows you to retain some level of control over your company. While the terms of your investment are fixed, you have the flexibility to negotiate a more favorable return on your investment. If you decide to accept their offer, you must complete an Initial Public Offering (IPO) within a few years of their investment. Once you’ve done that, you can exit the investment at any time with no consequences. So, while you still have to answer to shareholders when you file your annual report, at least you have the flexibility to decide what your priorities are and can make the most of the situation. When you file your annual report, you’ll still have to disclose your significant investment but it won’t be an issue as long as you’ve done your homework beforehand.
As you can see, there are many different kinds of investors who specialize in different areas. If you’re looking for a one-stop shop for all your investment needs, a venture capitalist may be the perfect fit. But if you’re looking for a more independent or flexible approach to raising capital, you may want to consider an entrepreneur who is looking to make the most of their experience.