How to Approach Investors for Financial Backing

How to Approach Investors for Financial Backing

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If you have a business idea that you want to launch, but lack the capital to start your endeavor, you can approach investors for support. Financial backing has helped many a small business get started, but you need to know whom to approach and what to say when asking for their investment.

Business Plan

Develop a business plan that offers details about your business and your goals. Its a document that the Small Business Administration considers a “roadmap for business success.”

Your business plan should look at your business three to five years out, outlining your strategies for reaching your goals. Key components of a successful business plan include the executive summary, company description, market analysis, your service or product line and your funding request.

Research Thoroughly

Never assume that every investor is interested in hearing your pitch. Some investors are interested in backing certain industries such as technologies. Your desire to launch a chain of smoothie stores will be ignored. Moreover, you will annoy the heck out of investors for sending them a missed pitch.

Inasmuch as your business plan is about you, investors really do not care about your goals. They want to know what is in it for them. Research which investor firms provide funding for your industry and learn what criteria is required to obtain funding. Review and score each company to find the ones that are the best match for your business model.

Make Your Pitch

Contact investors and request an appointment. Your initial contact may come by letter, via a phone call or through a personal introduction. Summarize your business plan and ask for an appointment.

At your appointment, explain to the investors what you know about their business and goals. Make a case for explaining how your business idea will help them achieve their investment goals. Your pitch isn’t about what you want, rather it is about helping investors get what they want.

Make Connections

Like any business proposal, your possibility for achieving financial backing may be based on something that has nothing to do with your business proposal. Instead, your “likability” may be the deciding factor for investors.

It is important to not only know the investment firm and its interests, but to know the individuals that comprise the investment team. Shared values, related interests and a similar worldview can help you obtain funding. For instance, if one of the investors is a humanitarian and prefers to back businesses that bring a community building approach to the table, you may find that your “smoothies” store directed toward empowering disenfranchised minorities may get her attention. Understand the values individual investors hold and make your pitch accordingly.

Considerations

No request for financial backing should be made apart from thorough research. Much of the information you need to acquire is available online or can be uncovered through a third party such as a business associate.

See Also4 Twitter Tips for Small Business Owners

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