According to the entrepreneurs I advise, the biggest challenge they typically face in starting a new business is funding.

It consistently takes a huge amount of time and effort to find an investor you can trust, and that constrains your efforts in developing the solution you envision. People always expect that it should be easy to find investors, given their passion and excitement for the solution.

Yet according to recent data compiled by Fundable, 57 percent of successful entrepreneurs end up funding their startup, and that's a good thing.

If you want to run your own show, and not hand off a large chunk of future financial gains before you start, the only approach is to dip into your own resources, or even work for someone else a while and save until you are ready to break out on your own.

According to the same sources, another 38 percent get support from family and friends, so that leaves only five percent who rely on crowdfunding, banks, angels, or VCs.

The hard work begins then, in finding a match for your domain and solution readiness stage, as well as an investor that matches your vision, values, and needs. Here are the steps I recommend to optimize your efforts:

1. Prepare a killer pitch and backup materials prior to investors.

Many entrepreneurs I know approach investors before they have a pitch. You only get one chance to make a great first impression, so you need ready answers to key financial and business issues. Do your homework on opportunity, competitors, financial projections, funding required, and hook investors the first time you can with an executive summary and ten-slide pitch.

2. Request warm investor meetings from peers and advisors.

The old cold call or broadcast email to anyone who has "investor" in their bio just doesn't work. In my experience, an introduction from a mutual friend or business associate will double or triple your odds of closing a deal. In fact, advisors and peers are the ideal investor.

3. Ask for help from people who really believe in your solution.

Your advocates feel a real stake in your success, and will often do much of the legwork for you, if not becoming an investor themselves. In any case, they can expand your community of believers, which is a key to success in crowdfunding, or passing the due diligence of a professional.

4. Participate in relevant industry events and thought-leader forums.

You need all the visibility and credibility you can muster to attract investors, and working at this level will also give you valuable feedback on your strategy and solution. It's also the place to meet future partners positively, and even competitors before they realize they should hate you.

5. Schedule early high-profile customer calls for partnerships.

As much as you need an investor, you need a few key customers to be your advocate and beta test site. These customers may also decide to fund you via royalty advances, or even a partnership. You benefit from their visibility, and they get personalized service and the features they need.

6. Offer a realistic equity percentage to generate interest.

Professional investors know that real help requires serious effort on their part. They will be turned off by single-digit equity offers and loan requests with low return potential. First-round funding requests should offer equity in the twenty to thirty percent range to justify serious ROI potential.

7. Establish a positive and active relationship with investors.

Investing in your venture isn't a "fund it and forget it" scenario for any serious investor. In fact, investors will grow wary when there's too much silence, or any effort to treat them as adversaries. Your reputation is dependent on sincere communications, inclusion, and common goals.

The ideal professional investor also changes as your startup matures. Angel investors typically are best for initial early-stage rollout funding, while venture capital firms typically are most valuable in later rounds, when you have real traction, higher valuation, and need larger investments for scaling the business across the country or across the globe.

Even if you decide to bootstrap or fund your own startup, the steps I recommend for preparation and execution are still valuable, since you are thus the key investor, and will benefit from the proper disciple on plan preparation, industry interaction, and customer involvement.

Casual and random efforts can quickly turn your startup into an expensive hobby, rather than a business.

Published on: Jul 27, 2018