The type of investors you need will depend on what stage of development your business is in.
Basic Guidelines
Start-Ups In The Seed Stage
Start-Ups At A More Advanced Stage
Businesses With Proven Growth Potential
Established Businesses
Basic Guidelines
- Identifying the right investor depends largely on the stage of your business.
- Start-ups, for instance, will have better success with Angel investors. Businesses with proven growth potential may find Venture Capitalists more willing to listen.
- Once you have identified a target investor, take the time to find out everything about the investor. The more you know, the easier it will be to pitch for his/her funds.
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Start-Ups In The Seed Stage
- You've conceived a new idea or concept. You need funds to set up the business, turn your idea into a product, rent an office and hire the right people.
- You are enthusiastic and passionate about your idea. Your success lies in being able to sell the idea to potential investors.
- Start-Ups in this stage are referred to as "Seeds". Having been just planted, you have no track record but lots of enthusiasm and ideas.
Challenges In Finding Investors
- Thousands of ideas are hatched everyday. Investors know that it takes a lot of drive, energy, effort and time to turn an idea into a successful business.
- Unless you are an established entrepreneur, you will find it hard to raise money from professional investors, such as venture capitalists.
- Most businesses at this stage are self-funded. The founders dig into their savings, credit lines and personal resources to give birth to their ideas.
Potential Investors
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Start-Ups At A More Advanced Stage
- Compared to a Seed start-up, your business is in a slightly more advanced stage.
- Your products or services may already be developed.
- You have some interested customers.
- You have generated some revenue.
- You may even have turned a profit.
- A typical investment that you may need at this stage could range from S$50,000 to S$100,000.
Challenges In Finding Investors
- Even at this stage, it may still be hard to interest investors. You are still in the "development" stage and professional investors are more interested in companies who are expanding.
- Biotechnology, nanotechnology and IT start-ups will find more ready investors than those in other industries. That's because investors are looking for high-growth sectors. They also look at products or services that have the potential to be sold globally.
Potential Investors
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Businesses With Proven Growth Potential
- Businesses at this stage are already bringing in revenue. They may be close to breaking even, or even be profitable.
- The business could be described as being in a stage of adolescence, in terms of experiencing a growth spurt.
- It has enough funds to operate but, in order to grow, the business needs new funds to increase market share and take advantage of new opportunities.
- At this stage, the business shows early signs of success. Additional investor funds and management expertise will help the company grow bigger, faster.
Challenges In Finding Investors
- Your business is attractive to investors, who may be willing to invest 4 to 5 times the company's profit level or