For a business to take off, it needs to have sufficient capital. The best – and perhaps the most sensible – option is to get a good investor to finance your venture. Finding an investor is not easy; you will need to meet with a number of them, pitch your business, rinse and repeat until you find one who fits the bill. Past that, you will need to split equity with your financiers, and it will take time to work out a fair arrangement.
As a founder, though, how would you want to split equity between yourself and your investors, to make sure that you get your fair share and retain significant control of your company?
Finding the Right Investor
June Angelides writes in the Financial Times that it is vital to find the right set of investors. The ideal investor, in this regard, is one whose goals are aligned with what you’ve intended for your business and will support you along the way, financially or otherwise. In other words, they offer more than just capital and are very interested in seeing you take your business to the next level.
Your business is set to get funded: what now?
At this point, you may already be heading in a positive direction with a potential investor. This is the part where you’ll have to talk about equity, or the ownership of your business’ assets. How should you and your investor work this split out?
- Entrepreneurs usually give out a whopping 20% to 25% of their equity.
- Strive to get more than just funding. Getting capital is obviously integral, even if it costs a significant chunk of your startup’s profits. However, it really helps you get funding from an entrepreneur who has extensive experience in your niche or a veteran who can offer valuable advice. They can help you grow your business for as long as they stick around and may even connect you with the right partners.
- Get funding from diverse sources. There are many different angel funding platforms with a special focus on investment. Some, like Transact Global, offer opportunities to emerging fund managers, allowing mutual growth between startups and their investors. There are also the likes of Alma Angels, who aim to empower female founders.
Focus on your company’s success
You have plenty of options when finding investors to fund your startup and provide long- or short-term value to your company. However, do not ever lose sight of your most important goal: getting your company off the ground and having it take off to great heights. Let your desire for success guide your decisions.