Creating a startup takes a lot of cooperation from other people. You need help from suppliers, regulators, a founding team, customers, and, of course, investors. But convincing investors that your company is worth risking their money on can be a challenge, especially considering that 50% of small businesses don’t survive past five years.
Here are three strategies to help you convince investors that your startup is worth the money.
Leverage Your Existing Sources of Legitimacy
Proving that your business venture is legitimate is far easier when you can already prove your own legitimacy. Previous business experience, network connections, and other existing assets can really help you attract investors to your project and prove that you know what you’re doing.
Align with Requirements, Norms, and Expectations
If you’re obviously flouting the rules of a game, chances are that people aren’t going to let you play it. When you’re trying to attract investors, aligning your company with the formal regulations and informal but typically present norms of your target industry can make you seem more legitimate and less likely to make unpredictable business decisions. While this step might cost you a bit of money in the short term, it’s essential to attracting investors that will boost your chance of success.
Redefine Perceptions and Assumptions
Successful startups derive their market from a simple concept; something makes them different from their competitors. Your chosen industry is going to immediately foster assumptions in potential investors, and you need to make your unique features clear right off the bat. Investors want to know that there’s actually a market for your product or service, and they’re not going to be interested in a copycat.
Most first-time startups ignore the management of how investors will perceive them, but it’s a step that can mean the difference between creating a successful company with excellent backing or struggling through your company’s first years with mediocre resources. Using these three strategies can help ensure that your first business can reach its full potential.