How to Get Investors for a Startup Business

So you've got your multi-million dollar idea with huge sales potential. You keep pinching yourself over how you've discovered the next best thing. The only trouble is you need money (also called venture capital) to get your startup business off the ground. Well, here are some tips on how to get investors for your startup business.

Instructions

Difficulty: Challenging

1. Lock up your intellectual property. This means getting your idea patented to make sure you are the sole owner of your idea. What's going to excite investors is knowing that they are the only ones who are in on this amazing idea. If some other company can come in and steal it from under you, then they'll never see their seed money again. Take the time to get the proper patents.
2. Form a corporation for your business. Many people don't think of this step at the outset, but it is imperative. When you are operating a business, you want to keep those finances separate from family finances. It gives you some legal recourse should someone decide to sue you (they can only get at the company) and it establishes the expenses of your business as legitimate in the eyes of the government and most importantly the IRS The rules to incorporate in each state are slightly different, but usually for a thousand dollars or less you can be a fully recognized corporation.
3. Create a list of people you think may contribute to your company. This can be friends, family and even the guy who steams the milk for your latte in the morning. Also included on that list should be the "big fish." For instance if you have an idea for a software product, taking a crack with Apple or Microsoft's research and development team is not a bad idea. You have your patents in place to protect your intellectual property. (And if the big boys are interested, they'll simply pay you handsomely to step aside.)
4. Develop an air-tight presentation of your business. This should include what the product is, why there is a huge demand, the cost to make the product and how much you are going to charge for the product. And if you're really on your game, how you think the product will be advertised. This is where you should spend some time and money to really make an impressive package. Maybe it's in DVD format, maybe you create charts and graphs. This shouldn't look like a high school book report but a business that is about to start flying.
5. Contact the people on your list and request a time to sit and present them with your idea. Once at the meeting, the most important thing is to be confident in your business. That is known as the "x" factor. Some guy might have the greatest idea in the world, but if the investors don't believe he can see it through to fruition, then the money will probably stay right in their pocket.
6. Offer the investors shares of stock. Remember that the money you are asking for isn't a gift, it's an investment. Therefore these guys need something in return. When you incorporate your company, you will be awarded shares of stock. (The amount is different based on the type of company you set-up.) By trading money for shares of stock they are now fully invested. This language should be handled by a business attorney so that there are no questions down the road. Also remember not to give away too much of your company as you may need additional investors down the road.
7. Work diligently to get your idea up and running. Investors like to see progress. It makes them feel as if they are going to get a return on their money. Make sure you keep them informed of progress as your startup business gets off the ground. Then proudly pay them their piece of the pie.