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4 Ways an Outside Investor Can Bolster Your Business

The ideal investor brings more than just money to the table.
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If you want to start a business or have already launched one, you know funding is a big part of growing and managing it. You might need other people's money to get your idea going, and you might figure, why not just go to anyone and everyone to ask for money?

But is that the right idea? Should you ask just anyone for business financing?

When I started my tech company, VerticalResponse, I knew it would be tough to raise funds. The year was 2001, the economy was tanking and companies were going belly up left and right, especially in tech. Venture capitalists, by the dozens, would take my meetings all day, every day. (They had nothing else to do.) I'd get rejected by the minute.

So what did I do? I essentially "bootstrapped" my company. I believed in my idea--to provide small businesses with easy and affordable email marketing tools--so much that I turned to people I knew personally and had worked with in the past. These were people who knew me well and trusted me with their cash. Ultimately, all 18 of them gave me money. (Only one of them was a relative!)

I also looked to these investors for financial support at certain points throughout the life of the company, when we needed extra funding to get to the next stage of growth. And they also brought more than just their money to the business.

So should you take money from anyone? The simple answer, in my opinion, is no. But it's so very tempting, isn't it?

Here are four reasons--the right reasons--why you should consider an investor in your company:

1. You want them to bring you business.

These people are connected to some of the individuals and companies you want to do business with. We gave one of our investors our email marketing services for free, as long as we could include our logo and a link to our website in all of their emails. We got a ton of brand exposure this way, and it was a win-win situation.

2. You want them to bring you money.

We had a few "friendlies" who believed in our idea so much, they brought in other investors who were friends of theirs. Friends plus friends equal more money.

3. You want them to tell their friends about you.

We had friends of investors who told their massive customer bases about us. Again, free exposure.

4. It's strategic.

You want a company to invest in you that has tons of customers that would benefit from your products or services.

So when you're thinking about who can help fund your business, make sure there could be an added value to the money they bring to the table.

If you enjoyed this post, sign up for the free VR Buzz and check out the VerticalResponse Marketing Blog.

Last updated: Jun 19, 2014




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