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How can I find investors of my business?

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You need to make sure your business is truly investable. Most businesses are not attractive to an outside investor since the business cannot earn high profits that enables you to payback the investor. Investors prefer to invest in a business that has very serious upside potential with the product or service offered. The truth is that about 80% of all small businesses will never attract any outside investment because it never generates much in profits. Most people create and run a small business to earn a living. They never make much money. These types of businesses (café, beauty shop, repairman, small farm, etc.) are not attractive to an investor. Investors are looking for a transformational type of business – it has a very unique or different product or service and if given some money, it can scale and grow quickly earning some serious profits. Therefore, you should ask yourself – do I really have a business that meets this type of criteria. Most businesses do not!

Most investors will not make any investment without some form of due diligence. This means they must have access to your financial statements, contracts and other hard evidence that the business is real. This often involves assigning a value or worth to the business. Investors do this for a simple reason: They don’t like over paying for the investment. Once again, most small businesses cannot measure up to this level of maturity and attract a serious outside investment. It requires that you have some basis for valuation (what the business is worth to the investor today) which is usually rooted in your sales revenues and / or profits. Remember, you are dealing with people who are financially smart and you better know your numbers when you talk to outside investors. All you have to do is watch Shark Tank on YouTube to see what happens when a business owner does not know their numbers > https://youtu.be/xMwZm1kgtc8

If you think you can measure up, then you might be able to get some interest from some angel investors or accelerator groups that can lend some support. However, you need to recognize that less than 5% of business owners who approach an outside investor (such as an angel group) will ever get any money. Therefore, you need to be grounded in the reality of how financing really works.

My advice to every business owner is pretty simple: Get to first customer on your own resources. Otherwise, you have only an idea and investors have little interest in funding an idea. They want to fund a real business that has some customers in hand – you have proven your concept in the marketplace and with more money, the owner can double or triple the size of the business in the next two to three years. If you have no sales, then your business must have serious growth potential given an infusion of money. Remember, investors have hundreds of choices where they can invest and they will not be attracted to any business that cannot pay back a lot of money or grow quickly. That’s the reality of what happens when you seek an outside investor. Here are some additional links:

https://www.thebalancesmb.com/what-are-angel-investors-392985 | https://www.angelinvestmentnetwork.us/ | https://www.afsic.net/africa-private-equity/ |

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