If you’re an avid reader of our blog, you should know by now what financial metrics and growth metrics to focus on in your startup, and how to create solid financial projections. Once you’re mentally prepared for fundraising and armed with the right documents that show you’re on top of your game and properly managing your business finances, you’ll still need to attract investors by telling a great story.
Your initial encounter with an investor or lender may come in many forms. It could be a formal pitch meeting but it’s often something simpler like a tweet, phone call, text message, webinar, email, or even an online application form. Whatever the format, it is important to understand exactly how to attract investors with an irresistible story that makes your company shine.
In order to effectively attract investors, you should be able to explain:
The core problem your product solves
The benefits for your customers
How investing in your company will benefit the investor
Once your investors are intrigued, they will grill you for details.
Use the following framework to make sure you don’t lose investors at the first hurdle.
1. Tell a great story that grabs investors' attention
To tell a story well, you need to be simple, passionate, articulate and have real examples.
So, ask yourself the following as you are crafting your tale:
Does your mother understand what you do?
Investors don’t have the time to research your idea, so you need to succinctly explain the concept, the market, and the plan of attack. Talk to a family member and explain what you do. You know you’ve hit it when they don’t zone out and convincingly answer, “Oh, I get it!” If you learn how to attract investors with a low-level summary of your idea, they will inevitably want more information and that’s when you can get into the finer details.
Can you articulate your competitive edge?
If you want to attract investors, you are going to need to show them where you have a competitive advantage in your market.
Where do you sit within the marketplace?
How is your product or service different from others and why?
Present the lay of the land, demo your product, tell customer stories, and focus on how you are disrupting your market.
Still got your passion?
If you really want to know how to attract investors, you’re going to need to be passionate about your ideas and you’re going to need to know how to show it. Take a moment to think about why you started the business and how you feel about it now that you’re a bit further down the road. If you’ve thought through all the reasons why you are still in the game, you’ll be much more convincing when you talk about the future success of your company.
How do they know this is real?
Having customer anecdotes and stories at your fingertips is the best way to get your message across. Real-life stories make your pitch much more attractive to investors.
2. Build a professional online presence
Just because you’re a small startup doesn’t mean you can’t look as professional as more established companies in your industry on the Web. Here are a few things you can easily do digitally to look like the real deal and attract investors through your online presence.
Secrets to designing an effective website:
Don’t reinvent the wheel
Research your competitors’ sites and improve on every single page.
Make sure your point of difference is clear.
Don’t waste time and money on the slickest designs and bells and whistles for your site. Focus on perfecting your message instead.
Include keywords
Use the language investors and customers use when they search for information related to your industry. Investors are more attracted to a story they understand and can relate to, so be sure to remember who your audience is and curate your story appropriately.
Look in your site analytics suite for the search terms visitors use on your site.
Research keyword ideas in Google’s Keyword Planner. You can also go a step further by taking advantage of other free keyword research tools, like LSI Graph, to find semantic long-tail keywords related to your business.
Your contact info is gold
Make sure your contact information is the first thing visitors see — they can be gone in seconds.
Include a phone number (a 1-800 number if appropriate), an email address, and a contact form.
3. Manage your investor-facing online profiles
Create multiple online matchmaking profiles — and keep them up to date. When new business owners ask us for tips on how to attract investors, it quickly becomes clear that this is one of the easiest, yet most often overlooked strategies.
At Lighter Capital, we often look at applicant profiles on Crunchbase and AngelList. It gives us a quick idea of their capital raising history, and the investors that have been involved. In order to connect with investors, have a presence on as many online platforms as you can, and stick with the ones that are most valuable to you.
4. Attract investors on LinkedIn
When learning how to attract investors, think of LinkedIn as your other website. Potential investors will check you out on LinkedIn before they get to your site, so take your profile seriously.
Treat your LinkedIn profiles like a resume — for key team members and for your company. Investors not only invest in products, but they also invest in teams.
Include a summary on your profile of what your company does. In addition to your job description, include the 30-second elevator speech for your company, along with a link to the company’s website. Make sure you have a professional looking picture. Investors are attracted to professionals.
Create a company page on LinkedIn. Reach a wider audience for your blog posts by sharing them on your company page.
Show an interest in the investors you are courting. Some investors won’t even consider you if you don’t check out their LinkedIn profile. If you want to attract investors, make sure they know you are interested in them first.
Depending on your industry and audience, there may well be other social networks where your target audience hangs out. The key to managing social media successfully is to be consistent. So, prioritize and focus.