How to find investors and attract funding for your startup in 2024

As a business founder, you can look for funding from various sources. Despite there being no single path to getting funded, most startups gain resources from one or a combination of the following methods: personal funds, grants, loans, crowdfunding, accelerator programs, angel investors, and venture capitalists. Each has pros and cons, so it’s crucial to research and compare them beforehand. No startups are the same, and neither are the types of funding for your business.

You’ll need to understand what influences investment decisions and work toward engaging potential investors. Remember that, together with high risks, investors are likely to come out with more profits from funding your newly created business than traditional investments such as bonds and stocks. The task is to show them your startup is worth their money and, more importantly, promises a good return on investment.

Why your startup should seek funding

A simple question to motivate yourself on the journey to find investors: Why seek capital in the first place? Starting a business is indeed a consuming activity, both mentally and monetarily. You don’t want to burn all your savings to sustain the startup, while external investments are much better options to make the company thrive, especially in the early stages.

Funding allows a startup’s vision to take flight. It fuels growth, attracts talent, and propels innovation into the marketplace.

Gaining support from external investments brings about many benefits to the business. History shows that most startups fail because they can’t access the required capital to reach specific growth rates or milestones. Without sufficient funding from outsiders, startuppers face the risk of seeing ambition crash down right before their eyes. On the other hand, external investments open the door to numerous opportunities, not only money but also market expertise, connections, and public attention.

Some of the most successful startups backed by external funding provide us with interesting case studies that we can apply. Uber received initial funding of $1.25M from angel investors, which eventually led to heavier investments in the subsequent years, making it one of the most valuable startups of all time. Conversely, Elon Musk used his own money to navigate SpaceX through challenges in the early days.

Instead of angel investment and personal wealth, Airbnb gained funding from the community, utilizing creativity and a strong service mindset. What they did was expose themselves to customers and investors as well through the cereal box campaign that addressed user needs at the time. All in all, startups raise money one way or another for scale and growth, which delivers a major impact in the long run.

Do startups have difficulties raising money?

The answer is yes, of course. It’s no easy job to persuade anyone to give you their money for your idea without any proof or guarantee that it will become a fruitful project in the future. Besides the obvious risk, you’ll have to compete with many other startups out there that fight their way to find the right investors as well.

Most of the time, investors look at certain qualities and factors to determine whether your business is worth funding. Though you don’t have any visible outcomes at this stage, a low-risk product or idea adds more advantages to your business profile. At least, investors must be able to envision the product coming to life one day, so they feel secure that they don’t waste money on something that only exists in the mind.

Moreover, a product that fits well in the market is also weighed higher than those that are way out of reach with regard to current conditions. Thus, you’ll want to focus on your product R&D to the point where it’s ready to launch. The more complete your product, the higher your chance to get funded by the right investors.

Additionally, potential investors may consider the human factor as well. They’ll look into how you operate the business, such as the management team, internal procedures, hiring process, and so on. Human resources are the backbone of a startup, and you’re expected to possess a well-functioning team with an entrepreneurship attitude and solid industry experience.

At what stage can your business seek funding?

Funding startups is divided into three stages where you’ll have distinctive needs and purposes. Understanding your business at different phases makes it easier to identify and pursue the right investors. Let’s take a look at the individual points of startup development.

• Pre-seed: You need money to develop and test a product. Usually, founders rely on their savings or receive support from friends and family. Other sources of capital include federal grants, loans, startup accelerators, or even angel investors when you own an idea that can disrupt the market.
• Seed: As business comes into operation, more money is needed to keep everything functioning, from office rental to labor costs. There’s no income yet, so this is a crucial stage to pass before launching a product. Startup accelerators and angel investors are typical sources to raise funds. 
• Startup: After product introduction and the very first stream of revenue coming in, the need for funding still exists to grow your startup further. At this point, venture capitalists come to the scene with angel investors. 

Looking at the above, you can see that funding is essential at all stages and the amount mainly depends on the scale of your business. That’s the reason founders have to mitigate risks and encourage potential investors to see their startups as lucrative investments from the get-go.

Regardless of your startup’s stage, a clear product vision is a must. As Zappos CEO Tony Hsieh puts it, “Chase the vision, not the money; the money will end up following you.” In addition, a useful tip is to establish a shared passion with your target investors at each stage and make sure you display it during the pitch.

The different investment options for startups

Finding the right funding resources can set the stage for your startup’s success. More so, knowing the different ways to secure capital allows you to identify the best fit for your business needs. Let’s explore the various investment options available so you can capture the essential resources to fuel your venture’s growth.

• Personal funding. Often, the initial go-to, using personal savings, gives you complete control over your decisions. However, it’s limited by your own financial resources and may put your personal capital at risk.
• Crowdfunding. This approach involves raising small amounts of money from a large number of people, including friends and family. It’s excellent for generating early-stage interest and market validation, though it usually provides limited funds.
• Grants and loans. These are often provided by governments or non-profit organizations to support small startups. Grants do not require repayment, making them highly sought after, while loans need to be repaid with interest but can provide substantial funding.
• Accelerator programs and pitch contests. Founders can take part in industry events to access resources and networks. Such opportunities are great to perfect the product by learning from other entrepreneurs in the industry. 
• Angel investment. Angel investors provide capital in exchange for equity, being particularly valuable for their industry experience and mentorship. You can get in touch with them via online platforms like Gust, Investor Hunt, or Tech Coast Angels.
• Venture capital. For substantial funding needs, venture capitalists invest large sums into high-potential startups in return for equity. This option is suitable for businesses looking to scale rapidly, albeit at the cost of some ownership and control.

Mixing up your funding sources at just the right times — like crowdfunding early on, hitting up accelerators in the seed stage, and bringing in venture capitalists as you grow — can keep your cash flow steady and strong.

8 ways how to find investors for a business

As there are numerous investment options available, there are just as many ways to approach fundraising. Don’t sweat when sharing your startup story — sincerity and passion are more than enough to make the first impression. The only factor left is earning a chance to pitch your business ideas. Try some of the below tactics to find the right investors.

1. Tell about your startup on social media

Social media is a wonderful place to showcase your startup to the target audience. LinkedIn is the top option where you can post startup stories, achievements, challenges, and solutions to improve your business. Don’t forget to interact with related posts and content to drive more traffic to your own stories.

An updated profile is also useful, as investors actively search for investment opportunities and may land on your page. An appealing headline and enticing intro about your startup help promote reputation and enhance professional connections. You should include links to the company website if there is one, as well as other social media channels to increase engagement.

A more proactive approach would be utilizing advanced search options to track down potential investors. Use keywords like “funding” or “investor” to locate their pages. Most of them have specific titles in the headline or summary, making it easier than ever to identify investors you’d like to connect with.

2. Use startup accelerators

Participating in startup accelerator programs is a useful method for gaining valuable knowledge on your line of business and exposure to angel investors and venture capitalists. There’s no better way to meet potential funders than at events and places designed for networking, like startup accelerators.

These mentor-based programs provide startuppers with guidance and support in fundraising and market acquisition through several activities. More importantly, mentors can help connect you with investors who find your startup a fascinating investment opportunity.

Expanding your network by establishing meaningful relationships with other contestants does more good than harm to your business. You’ll learn more from your peers than expected. A tip is to take part in accelerator programs specific to your industry or expertise to get in touch with the right people. Programs that have been proven with previous success stories are also worth a try.

3. Utilize crowdfunding

If you think future customers will likely be interested in investing in your startup, why don’t you try crowdfunding? Taking back to Airbnb’s case study, which we mentioned previously, a thoughtful campaign can make your brand viral and attract funding at the same time. Look no further, but your customer needs to tailor a project that touches on them.

Today, crowdfunding is the most popular tool to get money from a pool of individuals. Explore Indiegogo, Crowdfunder, and Kickstarter to get your way around some initial capital for the business. Crowdfunding platforms set themselves apart from traditional funding by offering a broad audience reach and versatility. Regardless of your field, you can start building a loyal community of supporters right at the birth of your startup.  

The four models of crowdfunding include: reward-based, equity-based, debt-based, and donation-based. The most common would be reward-based crowdfunding where contributors can earn a reward in exchange for funding. Indiegogo and Kickstarter are examples of this crowdfunding model.

4. Join startup events and pitch contests

Startup events are quite common worldwide, and you can search for those around your region to sign up for attendance. They are available online and offline, allowing flexibility while you take care of your new business simultaneously. UK’s MeetFounders and Bay Area’s TechCrunch Disrupt are respectable startup events to consider for registration.

When coming to any industry conferences, remember to be prepared for pitching. You should complete and rehearse your pitch multiple times beforehand for the best results. And when the day arrives, you can beat out fellow competitors with concise ideas, unique solutions, and interesting take on the market. You may get both praise and criticism during pitch sessions but remember to keep a cold head and open mind to refine your presentation along the way.

5. Discover investor networks and platforms

Angel investors often have extensive networks, and it’s likely that a connection within these circles could lead you to the right investor for your startup. That’s why you should list network expansion as your top priority when it comes to fundraising. Word of mouth might become your best friend, paving the way for more funding to come your way.

Before meeting any investors in person, you can tap into online platforms such as Fundable and Angel Capital Association. These tools enable you to search for registered angel investors and post your pitch deck directly onto the website. Get yourself out there by initiating conversations, building relationships, and investigating potential investors.

An advantage of online investor networks is the large amount of members, reaching tens of thousands. Eventually, your efforts will be paid back with referrals and introductions by the people you connect with who got the money to nurture the startup with you.

6. Look for venture capital firms

Venture capital usually has the highest expectation from a startup, meaning you must qualify for certain aspects to be a desirable addition to their investment portfolio. In short, these firms invest big money in startups that they think will become the next unicorns. You’re more likely to win this source of funding later on during the startup development as your business has survived the seeding stage.    

That said, unlike angel investors who focus only on a particular industry they’re most acquainted with, venture capitalists are open to a wide range of opportunities. As long as your company is taking off, you can gain access to venture capital, no matter if you’re in tech, real estate, or construction.

Similar to any other method of funding, venture capital also has its downside. You’ll have to trade the startup’s autonomy, having venture capital firms intervene in your business decisions or acquire a large stake in the company.

7. Engage in the local startup community

Your local community is your startup’s biggest advocate. Look around for people with similar entrepreneurial mindsets and support one another to find the right investors.

Regional startup associations, community groups, and industry organizations are resourceful channels to become a part of a startup ecosystem. Surrounded by extraordinary people, you might navigate your business better by learning from others and getting introduced to potential investors in your area. 

8. Ask for support from your social circle

What’s more stimulating than earning support from your loved ones? Friends and family are those who wish you success the most, so don’t hesitate to reach out for help when you get started. They might become your very first investors or connect you with more funding sources.

However, keep in mind that business is business, and you must have all agreements straightforward and carefully recorded. This way you can ensure your personal relationships are left undamaged while getting some funds to leverage the startup.

To-do list for a founder before approaching an investor

As we have discussed how to find investors for your business, what should you prepare to have the best appearance in front of them? Flashy outfits or an overconfident attitude will only make you look like some random MLM salesperson. Instead, steer the focal point toward the following components to create an ideal impression on your future investors.

Assemble your team’s core

Upon meeting up with your potential investors, you must have formed a founding team with solid backgrounds and entrepreneurial experience. Unlike established businesses with existing protocols and processes, newly found ones need a diverse, self-starter team to run smoothly. This is because everything isn’t set in stone and it requires a lot of flexibility to adapt at this stage.

A strong team consisting of managerial roles such as CEO, COO, and CTO is a must-have. It’s even more desirable if you have them create a business model, internal regulations, or corporate compliance by the time you meet an investor. Hence, you’ll have something to illustrate instead of just talking about ideas and plans.  

A great idea is a spark, but a strong team is the fuel that launches a startup. Investors back people, not just potentials.

Most investors take careful consideration of the human factor. It doesn’t matter if your idea is excellent or not when investors assume your team is incapable of bringing the vision to life. Your job as a founder is to highlight the team’s core and communicate it to potential investors. This way, you can influence their trust in your team, which will benefit your fundraising activities later. 

Create a business plan

You may ask what’s a business plan and if there is a template to help you succeed in raising money. First, this document summarizes the startup’s current financial situation and how you’ll use the funds (as if you’ve already got it) to execute product launching, for instance. And for the latter part, the answer is no. There’s no common template to follow, and you have to determine the success route for your business with little to no assistance from an outsider regarding the content of your business plan. 

That said, nobody knows your startup better than you, and a business plan should be ideas that you may already have in mind but don’t recognize. Elements to include are executive summary, products or services, market analysis, competitors analysis, marketing strategies, and financial projections. However, you don’t need to follow the exact contents or structure but leave room for creativity to catch your investors’ attention. 

We recommend putting extra effort into building a good business plan as most successful startups win over funding thanks to their remarkable ones. You can search for those plans online and learn from them, but remember to keep yours original and unique. Don’t go overboard, but maintain a precise and fact-based tone throughout your written plan.   

Take care of the pitch deck

When you’ve completed the business plan, it’s time to put together a compelling presentation based on the strategy you have in hand. This presentation, often called a pitch deck, is where you persuade potential investors to fund your startup. During these sessions, you typically have only two minutes to demonstrate your points, so it’s essential to make it brief and compelling.

To refine your pitch deck, put yourself in the shoes of your future investors and try to answer these questions:

• What milestone do you want to achieve with the funds?
• How is your current financial situation?
• How does your founding team respond to challenges and issues?
• What’s the future outlook of your startup, especially returns on investment?

There are just a few points of view on the business pick deck. For more technical aspects, such as outlines and samples, take a look at our dedicated articles: Crafting a winning business pitch: a comprehensive guide to captivate investors and How to create a pitch deck that attracts investment for your startup. 

If you’re not a design pro, consider partnering with a pitch deck design agency such as Halo Lab. We can help you build the best pitch deck possible, translating your vision into a clear and concise message that resonates with investors.

From pitch to payoff

Ultimately, startuppers seek external investments to scale and grow their businesses at the early stages. Typical funding sources include personal savings, crowdfunding, startup accelerators or contests, angel investment, and venture capital. Depending on the nature of your company, you’ll need funding in one or all of the stages: pre-seed, seed, or startup. 

There are many ways to engage potential investors, but it all boils down to getting your story out there. Whether on social media or at industry events, the key to successful fundraising is a concise, captivating pitch that outshines competitors and targets relevant investors. In general, investors desire good returns on investment upon IPO or a sale of the company.

Hopefully, this guide will give you a better idea of fundraising and ease your journey to finding the best investors for your startup. Although the path might be foggy and disorienting sometimes, remember your original purpose and passion to unlock the challenge. In the end, you’ll see all your hard work pay off as long as you keep moving forward.