When you’re starting a business, one of the most important things you’ll need is money. And if you’re looking for investment from outside sources, it’s important to know where to look. Here are some ways to help you find the right investors for your online business.
Key Takeaways
- A business investor is either an individual or group who provides capital to a company in exchange for something—could be a reward, equity, or ownership.
- The best investors have good knowledge and connections to provide valuable insights and introduce you to new clients, key advisors, and business specialists to help your online business.
- Asking your family and friends is a great way to get started in finding an investor for your online business being that you already built a good relationship with them.
What is a Business Investor?
A business investor is someone, either a person or an organization, who provides capital to a company in exchange for equity or an ownership stake.
This can be any private individual, angel investors, venture capitalists, or even family members who can loan a certain amount of money. They may also be institutions, such as banks or insurance companies.
While there are many ways to raise capital, such as applying for business loans or grants, seeking out an investor can be a great way to grow your business. Not only do investors provide much-needed funding, but they can also offer valuable advice and connections.
What Makes a Good Investor
When finding investors for your online business, you should look for these qualities:
- Accessibility
- Expertise in your industry or field
- Good connections
- Committed
Accessibility
When it comes to finding a good investor, accessibility is key. The more accessible an investor is, the more likely they are to be responsive to your needs and requests.
Accessibility can also impact how hands-off or hands-on an investor is. An investor who is easy to reach will be better able to provide timely feedback and support.
Of course, not all investors are equally accessible, but the best ones will make an effort to be as available as possible.
Expertise in your industry or field
A good investor is an expert in your industry or field. After all, you want someone who understands the unique challenges and opportunities that are inherent in your online business.
An investor with relevant experience can provide valuable insights and guidance that can help to increase your sales and grow your online business.
Furthermore, an investor who is familiar with your industry will be better equipped to assess the risk involved in any potential investment. This knowledge can be invaluable in protecting the interests of both parties.
Good connections
It’s no secret that having connections can be a major advantage in life. This is especially true when it comes to investing.
The best investors are the ones who know the right people to talk to, and how to get their foot in the door. When an investor has good connections, they can open doors for you like introducing you to new prospects or clients, key advisors, and business specialists to help your online business.
Having good connections also means lasting friendships and business relationships.
Committed
When it comes to finding a good investor for your online business, being committed is one of the most important traits you have to look for.
Sure, you can find an investor who is willing to put up the money, but if they are not committed to making it a success, then the chances are that the investment will go to waste. They should be willing to put in the time and research to find the right opportunities, as well as stay up-to-date on the latest eCommerce trends.
It also means being patient. Good investments don’t always happen overnight. It’s often the case that the best investments are those that are held for the long term.
How to Find Investors for your Online Business
Here are our top 5 ways to find investors for your online business:
- Ask your family and friends
- Try crowdfunding
- Look for private investors
- Seek for angel investors
- Work with venture capitalists
1. Ask Your Family and Friends
This may be the easiest way of finding an investor for your online business, although it may not produce a large amount compared to others. But this can be a great way to get started, as you likely already have a good relationship with these people. Plus, they may be more willing to take a chance on your business than strangers would be.
Even if they’re your parents or cousins or best friends, don’t be too casual in approaching them. Prepare a business plan and do a proper pitch. Be clear about how much you need and what you’ll use it for.
If they’re interested, they may want to see financial projections or other information before making a decision. Inform them of the possible risks in investing in your online business. This guarantees that the investors can make a proper decision based on transparency.
2. Try Crowdfunding
This can be a great way to find investors and raise the money you need to get your online business running. With crowdfunding, you can ask for funds from a large number of people, typically through an online platform. There are several platforms where you can post your business idea and attract investors.
One popular example is Kickstarter and Indiegogo which are both reward-based crowdfunding platforms. This is a type of crowdfunding where the business owner asks the investors for capital in exchange for some type of reward. The reward is usually the product or service the business is providing.
Another type of crowdfunding is where investors can take some ownership of your online business, usually in the form of shares. This is called equity crowdfunding. The investor will only earn and receive a share of the profit once your online business does well. This type of crowdfunding is riskier because there is no money-back guarantee.
3. Look For Private Investors
When it comes to securing investment for your online business, looking for private investors is a great option. Private investors can be a great source of funding for your business, as they are typically more flexible than banks and other traditional lenders.
There are many ways to find private investors, such as networking at business events. Business networking not only helps you find investors but also helps you make good connections, allowing you to gain insights into how other business owners are finding investors for their online business.
Building business relationships with influencers in your locality or working with professional business organizations is also another way of finding private investors.
4. Seek For Angel Investors
Angel investors are individuals who are often willing to take risks and invest their own money in early-stage startups. They typically provide seed money, which can help you get your online business off the ground. They are more focused on helping rather than generating profit. This is also why they provide more favorable terms compared to other types of investors since they are aware that the business they are investing in is in its initial phase.
5. Work With Venture Capitalists
This is the most traditional way to find an investor and is usually the final stage when it comes to funding a business. This means that they often invest in established and successful businesses with a solid management team and workable products or services.
If you’re planning to expand your already stable online business, work with venture capitalists. The amount given by venture capitalists is usually higher (could reach millions or billions) and so ROI is also predicted to be higher. They may also ask for a position on the board or executive leadership.
How to Find Investors FAQs
What do investors look for before investing?
More often than not, investors want to see a return on their investment. Investors are in the business of putting money into businesses so they can make money themselves.
What do investors get in return?
It depends on the type of investment. If it came from a reward-based investment, they expect you to give them the product or service itself as a return. For angel investors, they usually expect an IRR of around 20%-40%.
Final Thoughts
Finding an investor can seem overwhelming, but there are plenty of ways to get the funding you need for your online business. By reaching out to individuals or groups who share your vision for success and building a strong case for why they should invest in your online business, you can get the financial backing you need and focus on making your online business successful.
Further reading:
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