7 Ways to Attract Seed Money
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If you have the next great idea that hasn’t yet gotten off the ground, you may need some help but that help is difficult to get. In order to attract seed money from investors, you need to know what they’re looking for. Here are seven thoughts to consider before scheduling your first investor meeting.
Register Your Business
If you’re not serious enough about your business to register it as an LLC or other business entity, why would an investor offer you seed money to further a business that doesn’t officially exist? Don’t go to the meeting as an individual with an idea. Go as a company that is just getting started. The best way to register your business is to use a business registration service. In the 21st Century, registering your business is as simple as paying a minimal fee and signing some forms.
Establish Authority
If you create the next great product for back pain but you aren’t a physical therapist, chiropractor or other type of doctor, that isn’t necessarily a death blow. You must, however, be able to prove to the investor that you are an expert in the field. Do you write a blog? Speak at local events? Partnered with a physician or chiropractor?
Endorsements
It may be too early to show an impressive revenue stream. If that’s the case, take your product to documented experts and gain multiple endorsements. That new gizmo for aching backs that you made? Find a chiropractor who is willing to try it (for free) in his office and if it works well, have him or her write a letter, or better yet write it yourself and give it to the chiropractor for revision and have them sign it.
Build an Advisory Board
Dale Carnegie used to say that he was as successful as he was because he surrounded himself with people who knew a lot more than he did. This sentiment has been echoed countless times by the most successful CEOs. Investors want to see that you’re not trying to do it all yourself. It is impossible to have that kind of knowledge.
Personal Investment
How much of your money is invested in the product? If you haven’t made a huge investment out of your pocket, don’t expect an investor to make one out of theirs. Be prepared to show documents proving your investment.
Get at least Some Revenue
You don’t need to match sales numbers with the IPod when you first get started but get a small revenue stream in place before asking for seed money. This proves to the investor that your pricing, distribution, advertising, and other infrastructure items are in place.
Have a Well Constructed Business Plan
Every business should start with a business plan. In the beginning you may not have a well formed, official document using the proper format but before you go in front of an investor asking for seed money, you must have one. Do some research and make sure that everything in your plan can be backed up with statistics and quantifiable facts. If the investor can’t verify it, don’t include it.