As an aspiring entrepreneur, you might be wondering how to ask investors for funding? You are not the only person. Persuading an individual to invest in your startup involves a thorough research and developing a detailed and creative business plan or pitch. In this article, you will learn important information about how to ask investors for funding in India.
What are the different types of investments?
Angel investors for startup
Angel investors are individuals who invest their money in small startups or businesses. In most cases, such individuals are professionals from various fields who help young entrepreneurs achieve their dream. Angel investors usually invest in new startups and seek a minimal stake in the share of the business.
Venture Capital investment for your startup
Venture capital or VCs are professionally managed funds by various ex-entrepreneurs and financial wizards known in the industry as General Partners, GPs. These individuals generally invest in emerging startups and small businesses with high potential that guarantee a high return from their investment.
Bootstrapping your business
Bootstrapping is a simple form of self-funding your startup. You can raise funds from your savings and ask for contributions from family or friends to kickstart your business. Bootstrapping is only possible if you need a small capital. However, if you require a significant amount of capital, you can get it through business loan
This is the latest funding model and is quite popular among entrepreneurs and startup owners. In crowdfunding, you take funds from many people interested in your product or services. The investors might not be professional investors but common people willing to invest a part of their income in startups.
Offline communities and meetups
Often, big investors prefer investing in businesses that have already started making a profit. If you believe that your startup is lagging in reaching out to the correct people, you can get in touch with communities to network better.
Nowadays, co-working has become common, especially in the startup system. Various startups have shifted to workplaces as they are economical, convenient, and also an opportunity to interact with like-minded people. You can also attend mentorship sessions and various investor meetings in this workspace. Attending these meetings offers you an opportunity to reach out to more people and expand your market.
You may also ask investors to join a Limited Liability Partnership( LLP Registration) where there is no limit on the minimum capital investment.
How do you ask investors for funding in India?
Here are a few methods that you can follow to raise an adequate amount of funds for your business
Create a profile on AngelList
It is practically impossible for investors to know about your products or services if you do not publicize them online. AngelList is an efficient platform that informs potential investors about your company and the products you offer. Once you have created an impressive profile, you can share it within your formal or informal group, or you can ask for references.
However, also make sure to have your Business Plan & Project Report always ready. You should be able to showcase your business plan immediately to the interested and potential investors.
Improve your networking skills
If an acquaintance refers your startup idea to an investor, your chances of getting funds become brighter. After preparing a list of investors, do proper research on each of them and see if you have any acquaintances in common. Once you find the person, meet them personally and then share your ideas. Always carry legal documents such as Company Registration or GST Registration that highlight the legality of your business.
Create a classic introduction
As you may have heard, the first impression is the last impression. When introducing your business to an investor, you have to be cautious to draft crisp emails that can tempt the investor.
Inspire them to invest in your startup
Startup owners always seek the best investors, which keeps the business cycle going. During the initial stage of the pitch deck for startups, if you share your business goals and long-term objectives, the investors will understand how passionate and dedicated you are about your startup.
Tips to use while you ask Investors for Funding in India
- Try to make a concise pitch that is easy for the average person to understand.
- You can also mention necessary legalization details like LLP registration and partnership firm registration in the pitch.
- Stay away from difficult and technical words.
- Be specific about the uniqueness of your products, services, and the pricing
- Explain properly why the market needs your services
- To build some credibility, you can share some of your experiences
- On the pitch deck for startups, you can include the projected or estimated revenue over the next few years
- Share necessary details like how much money has already been invested, the current investors, and how much money you want to reach the next stage.
- If you are looking for a big investment, let the investors know your exit strategy if the idea fails.
There is no written short-cut method to ask investors for funding in India. Hence, it’s better to have a consultation from experts and prepare a solid pitch for your startup for easy funding.
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