Continue reading to explore each step as you answer the right questions to get the right investors for your business.
Step 1: Which Investor is Right for You?
There are different types of investors with different expectations. Some are part of investor networks, each having different industry connections that can help you with your startup goals.
Just as investors have to qualify the businesses they want to invest in, you have to qualify the investors you want to work with. We have divided this step into two parts to help you choose the proper investor effectively.
What Developmental Stage is Your Startup In?
Only a few investors would say yes to startups if they are in the earlier stages of development. Some investors would not be applicable at certain phases of a startup. Below, we have listed which investors are suitable for the specific developmental stages of a growing startup.
| Investors | Stage of Startup |
| Family or Friends | Seed Stage |
| Connections in Your Field of Work | Seed Stage |
| Angel Investors/Seedology | Seed Stage |
| Crowdfunding Platforms | Seed Stage |
| Small Business Loan | Early Stage |
| Small Business Grants | Early Stage |
| Equity Financing | Early Stage |
| Accelerator Programs | Early Stage |
| Venture Capitalists | Sometimes Early Stage |
The Seed Stage
The Seed Stage is when you have developed your business idea into a minimum viable product, and you’re developing it to become marketable. You are forming your business model and business plan during this stage.
Friends, families, and connections who know you are more willing to invest in your business idea during the Seed Stage.
People who share your interests can financially invest in you at this stage. Angel investors are well-off individuals with high-risk tolerance and want to see you succeed. They often are the biggest funders in this stage. People in crowdfunding platforms can also support you in exchange for rewards.
The Early Stage
The Early Stage is the product testing phase. It is the stage when you release your MVP to a small customer base and collect feedback to improve upon it further. In this stage, you establish your business by registering it and hiring the right people.
During this stage, you will need further funding to improve your product through market validation and product testing. At the same time, your business plan must include strategies for gaining more customers or clients.
If you live in the US, the Small Business Administration (SBA) Lender Match allows you to match with approved lenders for small businesses. There are also grant programs available in the US with different eligibility qualifications.
Accelerator programs are similar to incubators, but they help established businesses. Most of them provide funding.
Equity programs allow you to receive thousands in funds.
Venture capitalists can offer millions, but only invest in startups if they believe they will get a higher investment return.
What Do Investors Get in Return?
While there are many investor options in a startup’s seed and early stages, you must consider what you are comfortable with giving in investor returns.
| Investors | What Investors Get in Return |
| Family or Friends | What is in the signed contract agreement |
| Connections in Your Field of Work | What is in the signed contract agreement |
| Angel Investors | 10-50% equity |
| Crowdfunding Platforms | Rewards you promised them |
| Small Business Loan | 5.26-11.32% (as of the first quarter of 2023) |
| Small Business Grants | No need to pay back |
| Equity Financing | 10-20% equity |
| Accelerator Programs | 5-10% equity |
| Venture Capitalists | Investment interests and management fees from board roles |
Friends, family, and personal connections must be treated professionally with a contract explaining the terms and conditions. The agreement must include repayment terms, ownership share, exit strategies, and other details based on their investor value.
Company equity can be negotiated. Consider what level of control you are willing to share with your investors.
Step 2: Where to Look for Investors
When you have chosen the types of investors you want to work with, the next step is to know where to look for them. Most investors have online platforms, networks, and startup communities that you can join. We have provided links to our top recommendations based on each type of investor.
| Investors | Where to Look for Them |
| Family or Friends | Meetups and gatherings |
| Connections in Your Field of Work | Networking events, industry events |
| Angel Investors | Angel Capital Association Tech Coast Angels Life Science Angels Seedology |
| Small Business Loan | SBA Lender Match |
| Small Business Grants | Grants.gov |
| Accelerator programs | Y Combinator Techstars 500 Global |
| Crowdfunding Platforms | StartEngine Indiegogo Kickstarter |
| Venture Capital | Sequoia Capital Andreessen Horowitz Accel |
| Equity financing | Seedology MVP Program |
Step 3: In the Investor’s Shoes: What Do They Look For?
Now that you know where to look for your ideal type of investor, the next step is to understand what they are looking for. Then, include those decision-making factors in your pitch deck.
Generally, investors look for startups with high growth potential. Even if your business is still budding, you can prove it in your startup’s Seed or Early Stages.
In the Seed Stage, investor criteria include:
- Your product or service’s market demand
- Demonstration that your product or service can satisfy said demand
- Your product or service’s market potential
- State of the industry
Persuading investors in this stage would require solid research based on your findings and market research from other sources. See “How to Get Seed Investors” to know more.
In the Early Stage, investors would look for the following to determine their willingness to invest and the amount of control they would want to have to ensure a great return on their investment:
- All the things seed investors would look for in the list above AND
- Your business financials (how your business generates sustained revenue over operational costs)
- Your business plan (roadmap to achieving business goals and risk mitigation strategies)
- You and your team’s capabilities
Generally, the more information you can provide to help them understand your business, the better.
Seedology: Get Investors on Board with Your Startup
When getting investors interested in your startup, it’s essential to determine the right investors to collaborate with for funding. Setting your expectations on investor returns and where to connect with them is also crucial. Looking at your startup through an investor’s eyes is incredibly important so that you know what to include in your pitch deck and how to improve your startup.
Seedology offers startups $10,000-$100,000 investments with an equity cost of 5-15%. See our MVP Equity Program to learn more, and please reach out to us if you have any questions!
