TomorrowMakers

Having sufficient money to run your small business is a prerequisite for success. Arranging these funds, however, can be a task in itself. Here’s how you can go about it.

8 Ways to attract investors to back your business

Establishing and nurturing a business is an exciting yet challenging journey. When you start a small business, you have to be comfortable with all operational aspects. Sourcing and sales, compliances and finance, marketing and manufacturing - as an entrepreneur, you often end up dipping your toe in all strategic and operational areas of your business. 

According to India’s sixth economic census released last year, women entrepreneurs formed 14% of the total entrepreneurs in India. While it’s not a healthy number, what’s even more concerning is that average employee strength in women-owned businesses in India is a paltry 1.67 persons per business. One may assume it’s an indicator of the growing pains faced by women-owned businesses. 

Related: Tips for women entrepreneurs to fund their businesses

How to raise investments for your business

If difficulty in raising money is stalling the growth of your small business, here are some things you can try:

1. Prepare a pitch: You can approach a potential investor with a well-prepared business pitch. If your pitch convinces angel investors or venture capitalists, you can expect a significant cash inflow for your small business ideas. An elevator pitch is often helpful in getting an audience in the first place; it helps you grab the attention of the investor without going into too many details. Your actual pitch will, however, cover all the business plan, market research, feasibility study, financial details, etc. presented in an impressive format.

Related: 5 Myths about starting a small business that women need to stop believing

2. Rope in a co-founder: Getting a co-founder to share the capital requirement is an effective alternative to seeking finance outside. Handling everything can be difficult for one woman, but at the same time, the process of bringing in a co-founder is a delicate matter. In the right co-founder, you get someone who is just as inspired in the business ideas that you conceived. Strong leadership is also useful in getting a bigger investment in the future. 

3. Take advantage of government schemes: Various government schemes may be more than enough to get a business up and running. So, find out what the government is offering women entrepreneurs like you. You can avail of a Bharatiya Mahila Bank loan, apply for a Stree Shakti package, Mudra Yojana, or look at the Trade Related Entrepreneurship Assistance and Development scheme.

Related: Government schemes that can help women entrepreneurs in India grow their small businesses

4. Resort to online fundraising: Online business ideas have received a new financial avenue through online fundraising. If the investors are convinced about the return on investment, a bank, a fund, or an angel or individual investor may show interest in it. You are likely to get donations as well as equity-based crowdfunding through these platforms.

5. Consider approaching a startup accelerator: Startup accelerators welcome sincere entrepreneurs who can successfully pitch the feasibility of their business ideas. Benefits include initial cash injection, introduction to prospective investors, mentoring and future rounds of investment and fundraising. With startup accelerators, you are not dependent on your network for investment.

Related: How I managed my personal finances while running a business

6. Highlight business performance: If you can bootstrap your way to initial business success, the investment will follow. Showcasing the viability of your business with solid recent results can garner a positive response from investors. Just as money is required to grow your business, initial growth is required to attract investment offers organically.

7. Showcase your products: If you are engaged in the production or trading of a particular product, it is always advisable to showcase it on the right platform. Be it at entrepreneur meets or accelerator programs. Nothing can impress prospective investors like the look and feel of a tangible product. If the investor sees promise in the product, he or she will be keen to invest in it.

8. Participate in business events: Events are a great place to find an investor. They give you visibility and bring small businesses and investors together under one roof. As you get noticed by more and more people, your business idea is more likely to reach the right person. Organised networking summits and industry trade fairs are examples of events that can give your small business the next big break.

Last words

Women-owned small businesses can benefit by applying these approaches to attract the right investor. Early-stage startups like yours thrive on the timely inflow of cash. This money can be invested in hiring the right people, building the required infrastructure, and marketing your product efficiently.

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