Do you want to get your startup funded by accredited investors?
Do you want to meet accredited investors who can help you take your startup to the next level?
Many entrepreneurs spend a lot of time and money on investment websites searching for investors but don’t see the results they want.
They connect with angel investors but the conversation doesn’t go any where or they have a couple of phone calls and then conversation dies.
If this is you, Not all hopes are lost!
This doesn’t mean the “find investor websites” is a waste of time.
With some planning, you can turn your startup into a big time company. You can win more customers and investors to recognize your brand!
In this post, I’ll explain 5 reasons tech startups don’t bet funded by accredited investors.
Not only that, but we know you probably want to know what you can do to reduce the amount of time and energy you spend on developing investment materials too.
It can be a real energy suck. We’ll give you some tips and tricks to cut the hours you currently spend on find investor websites.
1. Your Stage Is ‘Too Early’ And You Have No Traction To Prove Your Business Sustainability To Accredited Investors
Most of the time we see entrepreneurs who are very passionate about their startup seek investment or working capital for their idea way too early during the idea and product development phase of the company.
Though it’s not bad to begin searching for investors early, ideas alone won’t get you funded.
The myth we all know is that, every investor is rich and loves a great profitable business idea.
Though a business maybe profitable, an investor may not be attracted to invest because the return on investment may not be the greatest for the investor.
New investors are happy to make a ROI between 3 to 10 times the initial amount he or she invested. Experienced investors expect a ROI between 5 to 50 times the initial amount he or she invested in your startup.
How Much To Ask When Raising Funds From Accredited Investors
- We usually recommend founders to seek between $10K to $1M from angel investors and from $250K to $100M+ from venture capitalists.
- Angel investor funds can be used to complete the product development
- Venture capital funds can be used to expand the startup
The reality here is new entrepreneurs forget, great ideas means nothing without customers and founder credibility.
For example: It will much easier for Elon Musk to raise $100 million dollars from investors compared to a small startup owner nobody knows about. right?
Investors do not invest in only ideas, they also invest in the capable team you bring on board.
Since the explosion of mobile apps and websites, tech companies are typically being considered as “High Risk Businesses” and this is simply because they are easy to fail.
To make it easier for your company to raise funds, bootstrapping your startup could be the cheapest way to earn a free ticket to meet accredited investors.
What Is Bootstrapping A Startup Company?
Bootstrapping a company means running a startup without outside working capital.
There are few things that happen when you bootstrap your company:
- It demonstrates your commitment and belief in your company to investors: The amount of money you invest in your startup can tell investors how much you believe in your idea.
- You learn to spend where it matters and focus on what is most important to the business.
- The amount of money, time and effort you put in your startup during the product development phase can be considered in your deal negotiation with investors.
2. You Have Presented An Overwhelming Business Plan And Pitch Deck
This point should have been number 1 and as serious as it sounds, some entrepreneurs prepare investor business plans about 300 pages long.
It is completely not necessary to have such a long business plan. 99% of accredited investors won’t have the time to read everything in your business plan.
Tech Investor Network typically recommends, 10 – 50 pages long and usually, that should be enough to cover all the necessary information about your startup.
3. Having Zero To Little Knowledge About Your Competition
Many tech startups do not get funded because they do not know who their competitors are and even if they do, they know very little about them.
The mistake most tech founders often make is getting overly attached to an idea.
They get too attached to their idea or project without doing proper due diligence on the existence of idea.
Then they quickly rush to build a prototype, only to find out the product or service already exists.
How To Find Out If Your Idea Is Unique
The best way to find out if your idea is feasible and unique without doing a patent search is to study your direct and indirect competitors.
Study and analyze how your competitors have evolved with their product or service they developed over the years and this is the true mastermind…
You can also simply do a patent search provided to you by your local government as well to see some of the technical details if you need more information and assurance of the ideas existence.
To convince an investor that you know about your competitors, you should be able to know exactly what they do.
In your discussions with accredited investors, mention where your competitors operate, their previous investment amounts, latest accomplishments or failures etc.
It is always best to know your competitors thoroughly.
Competitor intelligence can help you know if you’re winning or losing a market share.
4. You Have No Customer Acquisition Plan
Developing a customer acquisition plan involves the integration of several marketing channels which can include:
- Mass Media
- Social Media
- Search Engine Marketing
- Paid Advertising
- Strategic Partnerships Etc.
A well designed customer acquisition strategy must consider the best form of strategies available considering passive lead generation strategies.
Have you ever heard the saying that, “without marketing a business can’t survive?”.
Having a great idea is one thing, and having no solid customer acquisition strategy would shut down your business faster than you started it.
Many great businesses have closed today because other businesses came out with a better customer acquisition and satisfaction strategy.
The famous Toys R Us chain of retail stores which served North America for many years had to shut down due to the growth factors of Amazon and the like.
Here Are 12 Effective Ways You Can Acquire New Customers:
- Search Engine Optimization
- Search Engine Marketing (PPC) Reputation Management
- Referral Programs
- Email Marketing
- Direct Email
- Community Service
- Mass Media: Tv, Radio, Newspapers & Sponsorships
- Public Relations
- Strategic Partnerships and Affiliates
5. There’s No Team Behind The Idea
A startup with only a single member as founder and manager could prove difficulty when accredited investor funds are needed.
Investors understand that startup companies require a lot of mental and emotional strength to keep the company running.
If your product is 100% completed and does not require a team to run the business, you can seek investors else we recommend you consider partnerships with credible individuals.
A startup with a team that can demonstrate experience, practicality and some traction usually has a 90% chance of getting funded by accredited investors.
Accredited investors usually do not invest in just an idea. Having a prototype or patent helps them get a better picture of your overall idea.
Startups that use the Tech Investor Network Investor Funding Service are usually investment ready and require working capital between $20K and $100M+.