How Women Entrepreneurs Can Find Early Stage Investors
Basically, early stage investors offer funds to businesses or startups in exchange for company equity. The investor might be an investment group that specializes in these kinds of business opportunities, an individual with a high net worth, or sometimes the funds come from local community organization created to boost local businesses.
As an example, Golden Seeds is a club that specializes in making early stage investments in companies that have female founders. If investors accept your request, you will have the option to present to them. Under 2% of companies receive funds from Golden Seeds.
Because funds are so limited, there are several things you'll need to demonstrate before approaching Golden Seeds, and these tips apply to approaching most early stage investors. Below is our breakdown of how women entrepreneurs can find early stage investors, some of the best practices when making the approach, and a short list of some of the current best options available for finding investors for women entrepreneurs.
Demonstrating Viability
To start, you'll need to demonstrate that you have a product to the investment group. For example, you may want to show a prototype when presenting.
You will also need to show how you will earn money. You'll need to showcase both a business model and a revenue model. What are people going to pay for your product? How will you scale?
As an example, you may have developed a product and identified your target audience. From here, you'll want to determine how you can turn this product into a successful business. How will you market the product? What sort of sales plan do you have? How do you plan to roll-out your product?
Approaching Investors
Don't approach any early stage investors until you've answered these questions. You'll need to be aware of who your competitors are, and you'll need to be able to present information in a compelling and engaging way. Who are your top competitors? How will you differentiate yourself from them? How large is your market? Early stage investors are similar to venture capitalists in that they are always searching for strong investment opportunities. You'll have a higher chance of securing funds if you can demonstrate that your market is large.
Early stage investors want to put money into companies that are going to see growth. They'll see larger returns if they invest in a company with is profitable and has high revenues. The goal of most investors is to earn back between three and five times the money they spent within five to seven years. As an example, if an investor offers you $100,000, they'll be expecting to see a return somewhere between $300,000 and $500,000.
Making the Pitch
Furthermore, all of this information will need to be presenting in a short period of time. In most cases, you'll only have between five and seven minutes to present. Because you'll submit background materials online ahead of time, you won't need to cover this information. However, you will need to persuade investors that you have a strong understanding of your business and that you are the kind of entrepreneur that they will want to invest in.
Finding Potential Investors
If you're looking for additional information on venture capital firms and early stage investors that invest in women, you can find resources and lists of the best options below: