Securing funding is a two-way process: you know what you want from investors, but what do they want from you?
By Jordan Gaspar and Lauren Jupiter (Co-founders, AccelFoods)
So you’ve reached the stage in your company when it’s time to start looking for investors. Congratulations! Perhaps you’re seeking outside capital to build a bigger team, increase production or focus on sales.
Whatever the case, as investors ourselves, we’ve got a few tips for companies in need of fundraising:
1. Know How Much Capital You Need and Exactly How You Plan to Use
The first step for any entrepreneur looking for funding is to answer two questions: “How much?” and “What for?” Obtaining funding can be a tremendous boost for a growing company, but knowing you NEED money is not enough; investors will want to know that you have a clear understanding of how much money you will need to achieve your objectives, how long the money will last you, and what you plan to do with the money once it hits your bank account.
Investors not only want to know you’ve thought about the current round of financing, but also want to be sure you’re considering future rounds of financing and how further capital infusions might impact their investment going forward.
2. Stand out with Sound Infrastructure
While there’s no set formula to standing out from the crowd, we’re often most excited when we see businesses that have built a sound infrastructure and practices that support efficient and purposeful growth. We understand entrepreneurs are often forced to make decisions on the fly, but we like to see businesses that have built a framework that allows them to orient these decisions around a broader, more well-defined strategy.
3. Go Above and Beyond to Build Relationships
We look to partner with entrepreneurs who view relationship building as a core competency in their business. In our industry, the relationship with distributors, co-packers, retail buyers, potential investors or fellow entrepreneurs can be the difference between a business that survives and a business that becomes a blow-out success.
When approaching an investor, exhibit knowledge of the business (including your numbers, the competitive landscape and what differentiates you, potential exit scenarios), professionalism, passion and a willingness to receive feedback.
Go to local events and larger trade shows and don’t be afraid to introduce yourself. Follow-up with samples and a handwritten note — these personal touches can go a LONG way.