There has never been more interest in STEM start-ups than there is today. The sector is booming but nevertheless, finding the initial investments needed to get a start-up off the ground can be difficult. How can you make your business stand out and show prospective investors what it’s worth? How can you find and approach them, and how can you be sure that they’re the right investors for you?
This article takes you through the process step by step to help you get the best results for your business.
Polish your profile
Before you approach investors, you need to make sure that you’re able to present them with a tempting proposition. This means ensuring not only that your business is functioning well, but that it looks that way. It also means making sure that interested parties can quickly access key information. Think of it as a matter of adapting your business plan to appeal to specific individuals or organisations, much as you might adapt your CV if you were seeking employment. In the process you may identify changes that you need to make in order to be better at attracting investment.
Speak to your bank
If you need to borrow a relatively small amount of money, it’s worth turning first to your bank. Taking out a small loan can enable you to bootstrap your company into a position where investors find it appetising. Discussing a prospective loan with your bank will also give you access – usually for free – to an expert perspective on the financial viability of your enterprise, its strengths and its weaknesses, which can be invaluable when you’re working out how to present yourself to investors.
Establish what you want
What exactly is it that you’re looking for from an investor? If your first thought is simply “Money,” think again. Not all investors are alike and finding the right person could be crucial to the success of your business. Some do only want to give you money and then leave you to your own devices, which is great if you know exactly what you’re doing, but that’s rare with a start-up. Others want to get involved and can be invaluable mentors – and, of course, some will want to impose ideas on your business that you disagree with.
Make sure you can find the right match for your business and remember that investors come from many different backgrounds. Lady Barbara Judge defies the stereotypes as a highly successful female investor in tech, while Felecia Hatcher has a strong history of supporting fellow black entrepreneurs.
Learn to pitch
When you meet investors you’d like to invite onboard, or when you get the chance to talk about your enterprise and hope to attract more general interest, you’re going to need to have a pitch ready. Think about your unique selling point, any outstanding talent you have in your company, any big names associated with it and any other details likely to grab the attention of people familiar with the industry.
Try to boil all this down to a pitch you can deliver in under a minute. Practice so that you can say it confidently and decisively, and be ready to expand on any area that you’re then asked about. Keep in mind that there are two important things you need to communicate: your idea and your personal belief in it.
Network, network, network!
Just as jobseekers are advised to network, business owners seeking investment should get out and about as much as they can and develop their connections both in person and online. Although they can be expensive at a time when every penny matters, industry conferences are well worth the money if you know you’ll have the chance to meet useful people there. Read the trade journals and other industry news and look out for chances to meet the investors who interest you in person – especially if there will be a mutual contact there who can provide you with an introduction.
Get government help
One of the great things about being in STEM is that there’s a lot of support from the government, including direct funding in the form of grants which you can apply for directly through government-backed schemes. Some will also offer advice on connecting with investors and other funding bodies, and can provide seed funding to make investing in companies like yours more attractive to investors.
Although the process of reaching out to investors can seem daunting at first, you’ll soon find that you get the hang of it and you’ll be able to fine tune your approach as you go. Don’t despair if you don’t succeed straight away. There are a lot of potential investors out there. If you have a good business, a good pitch and the will to be persistent, there’s no reason why you shouldn’t be able to find what you need.