A Quick-Start Guide To Finding Investment For Your Small Business

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how to get investment for small business
7 min read

Here’s how to get investment for small business: the ultimate guide for all budding women entrepreneurs.

It takes a whole lot to go from a big, disruptive idea to an industry-leading brand. 

You need to commit to the smart slog, get the right people to notice you, and get the right people to invest in your business.  

And the last part is one of the most important things to remember. Because let’s face it – 9 out of 10 start ups in India fail due to lack of funding or because founders don’t know how to use those funds to strengthen the bottomline of their business. 

So how do you go about it? Because it really does take more than a savvy pitch to convince investors to open up their wallets. 

Want to get smart money for your growing business in India?

Keep reading. 

But first – when should you start looking for investors?

Your passion for your idea may be fiery and magnificent, but is it strong enough to brave the storm of “nos” when you ask for business funding?

The biggest mistake most businesses make is to jump the gun and aim for big money without getting to know the viability of their product or business. 

So if you want to attract the right funding for your business, do these things first:

  • Clarify your vision and brand purpose – that is, get really practical about and clear on why your business should exist
  • Create a minimum viable product (MVP) 
  • Test product-market fit
  • Get clear on your differentiation
  • Use customer data smartly to get traction in the market
  • Be your own hype-woman or hire a PR expert to get eyeballs on your business 
  • Gather data that proves your business is a profitable venture

I know you have a lot of questions at this point – a key one being all that I mentioned above also takes a significant amount of funding. 

how to get investment for small business

I hear you and I have suggestions to cover all your bases. The most important thing to remember at this point is this.

Getting smart money for your business is a process and not always the end goal.

Curious? The next section will make it clearer.

So here’s how to get investment for small business.

How to get the right funding for your business

Bootstrapping

Boot-strapping or self-funding is a great way to get the ball rolling when you start your business. You can also speak to friends and family who can help you at this stage with both funds and guidance. Because while money is an important part of scaling your business, the right guidance can take you places. 

This type of funding is known as pre-seed funding – that is, money raised at the earliest stage of the business. 

Crowdfunding

While some businesses can keep paddling while bootstrapped, others need hard cash from day one. 

If you have an MVP and have managed to test product-market fit, consider crowdfunding. 

Crowdfunding is a great way to raise money from your future buyers, fuel your marketing, and get customer insights on the fly. 

Here’s how you can go about it:

  • Create an account on the right crowdfunding platform. Why do I say “right platform?” Essentially, each platform caters to specific types of businesses or products. For example, some platforms may be better for tech products while others back more creative enterprises. 

Wondering which are the most popular ones? Here you go: Kickstarter and Indigogo are big-wig international platforms, but if you prefer something homegrown, check out desi options like Catapooolt, Fuel a dream, Ketto, or Wishberry.

  • Set up your page with your product/business details, funding goals, and reward system (this is what your backers get in return for funding your business.) 

If you ask me, businesses with clear big-picture goals tend to get more traction on crowdfunding platforms. 

how to get investment for small business

Crowd-sourcing is also a type of pre-seed funding because you’re still in the production and testing phase. 

Angel investors

Angel investors are high net worth individuals who invest their own money into growing businesses (in exchange for part-ownership or equity) and are also open to mentoring them. 

If you’re still figuring out how to run your business and need funding for polishing your product and growing your team, getting an angel investor on board is a great option. 

Funds from angel investors are known as seed funding. This means you already have a proven product and you’re looking to get momentum in your business.

Venture Capitalist funding

What’s the difference between angel investors and venture capitalist funding?

Well, angel investors fund a business with their own money while venture capitalists are usually a group of professionals who belong to an investment firm. 

The “capital” in venture capital isn’t an individual’s wealth but revenue from other companies and foundations. Also, the money you can raise from VC funding is much higher than what an angel investor would be willing to invest. 

This is because venture capitalists are looking to invest in companies that are already stable and profitable (which is why seeking VC funding in the nascent stage of your business is a big no-no). 

Essentially, you need VC funding when you’re looking to boom. Again, VC funding is also not the end of the road – it’s done in stages.

Series A Funding: This round of VC funding is raised to help start ups develop a profitable business model. If you’re already profitable, Series A funding will help you skyrocket your revenues. 

Series B Funding: Once a profitable business model is established, Series B funding is raised to grow the customer base as well as focus on high-level hiring to take the company to new heights. 

Series C Funding: When your start-up has matured and stabilised in one market, you may be looking to expand your market or portfolio of products. This is where Series C funding comes in.   

Most companies stop at Series C funding, but depending on your pace of growth and goals of expansion, you can also go on to invite more funding.

how to get investment for small business

Bottomline

I bet you have a fair idea now about how to go about getting smart money for your business.

But before I close, I’d like to leave you with a couple of things to chew on:

  1. Always opt for investors who have experience in your industry
  2. Make sure your investors are aligned with your vision. This rules out a lot of friction in the long term. 

So there you have it! A quick guide on how to get investment for small business! 

Remember, if you have clarity, passion and commitment on a business that maps well to an untapped market need or fulfils an existing need in a better way, nothing can stop you from succeeding!

You’re invited! Join the Kool Kanya women-only career community where you can network, ask questions, share your opinions, collaborate on projects, and discover new opportunities. Join now.

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