Even with a solid business plan and a demonstration of good financial management skills, it is not uncommon for entrepreneurs to have to pitch their ideas over and over again before finding investors for SMBs. Here are some tips that can help.
Although India now boasts a growing startup ecosystem, with over 40 venture capitalist firms and thousands of angel investors, there’s also a good chance you’ll need to identify dozens of potential investors for SMBs before finding the funding you need. These tips can help make your search easier.
Narrow Down the Type of Investment You Want
Before you approach investors for SMBs, understand and decide which types of investment you want. For example, are you after cash to buy machinery or raw materials? Are you willing to negotiate with an equity investor who injects money into your business in exchange for partial ownership and a share of the profits later?
While equity funding is the most common type pursued by most entrepreneurs, you may also find investors for SMBs willing to invest in other ways, such as through venture debt (very much like a term loan, and is repayable at a future date regardless of whether your company is turning a profit or not). Discuss with your investor what sort of repayment scheme would work for you both.
Build a Profile on a Startup Portal
Sites like AngelList and LetsVenture are great connectors between angel investors and startups looking for funding. Currently, there are over 14,000 listed investors in India alone on AngelList.
Be as specific as possible in your profile and include all the essential information about your business as well as your team members, and be sure to share your profile with everyone you know on any social platform where you engage. This will make it easier for interested parties to find you.
Join a Startup Accelerator or Incubator Program
Incubators or accelerators are designed to help young startups find their footing, often by offering funding, mentorships or access to technology and office space in exchange for equity.
There are many accelerators and incubators in major cities around India that offer a range of programs to aspiring entrepreneurs looking for some assistance in getting their companies off the ground. Startup Village, for example, is an incubator located in Kerala supported by the Indian government and working with startups until they begin to generate revenue.
Microsoft Ventures in Bangalore offers three- to six-month programs for tech startups and has incubated over 30 startups to date – without collecting debt or equity in exchange for the programs it offers.
Finding funding for any new company can be challenging, but there are resources and options that can help entrepreneurs connect with the investors for SMBs they are seeking. Taking the time, in the beginning, to see which options are the best for you and your company can help make kicking off your startup much easier.