Some startups actively seek investors. Other times, they find you.
My best friend and I founded Launchpad, Fairleigh Dickinson University’s first student-led entrepreneurship organization. We saw the need for students on campus to have resources available to help them start their own business, including networking opportunities, mentorship and help finding funding.
Eventually, we became university-recognized and even assembled an executive board. We also got the help of a number of faculty members including the chair of the entrepreneurship department as well as an entrepreneurship professor. Little did we know that one day, a venture investor would come knocking.
We recently received an email from Jon Budish, a managing director at investment-banking firm Jefferies Group. Not only is he an FDU alumnus, but he’s also invested and mentored many startups. He heard about Launchpad and was eager to learn more about how he could get involved. After a brief in-person meeting, he quickly decided to join in as our first lead investor and offered to help bring in others invests, who volunteered to also serve as mentors for new startups.
We hadn't initially considered tapping into the school's alumni. Instead, we actually launched a DVD-rental kiosk on campus to help raise cash for the growth of Launchpad. But now that we've gotten some attention, we're starting to consider other alums and even other investors.
Here are four important things to remember when trying to attract your first investor:
1. Create value right away. From day one you need to create a real need for your product or service -- even if you only have a few customers. At first, this may mean raising a small friends and family round of financing to get a minimum viable product or sales in advance of your product launch.
2. Know what you want. Look at the things you could do even if you don’t have enough resources to do what you really want to happen. This might mean creating a different kind of small business that could fund the venture you really want to create.
3. Network, network, network. Even though we didn’t have all the resources we'd need to get going, right away we started meeting with members of our university community who helped us get started.
4. Use past successes as leverage. Be sure to pull in others by showing them what you’ve already accomplished. Creating value out of the gate means opportunities will start coming to you as others see what you're doing and want to be a part of it.
What are your tips for attracting a first investor? Share your thoughts in the comments section.
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