3 Tips for Choosing Initial Investors to Help Your Business Grow

Australia’s economy is going strong, and news sources indicate that the time is ripe for Australian startups.

In 2018, Australia spawned almost 1,500 startups. But, the ugly truth is, despite the healthy state of the economy, a large number of these will fail. According to Startup Muster’s 2018 Annual Report, almost 50% of startups are currently trying to raise funding.

Without funding, a business is sure to fail. But, when you’re looking for initial investors to fund your startup, there’s more to consider than the amount of money they’re willing to spend.

Read on to learn tips for choosing investors that will help your business grow!

Mobile applications are the new corporate enterprises. If you’ve got a great idea, you can easily find yourself heading a successful company, but you need to be smart about the business side of things. 

Only a third of all startups will survive beyond their first ten years. In fact, according to statistics, the failure rate for venture-capital-backed startups is 75%.

One of the things that can help to start your startup off on the right foot is to partner with investors who best-support the growth of your business.

But, how do you know what to look for?

Sometimes, it can be hard to tell which investors are going to be good for business and which ones are likely to create a challenge. But, these tips will help you set your sights on winners.

It’s important that you choose investors that are appropriate for your business in its’ current phase. There is a time for venture capital and angel investors. And, there is a time for seed investors.

But, no matter how much money you are seeking (or how little), you want to be sure that communication is clear from the start, and that the terms are clearly stated and agreed upon by the parties involved.

You should also choose investors that are best-suited to offer the solutions you need the most for whatever stage your business is presently in. In the beginning, you will need strong supporters. As you progress, you will need investors who can offer more specific solutions.

Trust is of the utmost importance when determining who will have a vested interest in your company’s financial affairs and ongoing success. 

When you are just starting out, you are bound to encounter a few bumps in the road. You want to know that your investors are willing to maintain support even through the twists and turns you encounter during your first years in operation.

Also, if your business takes a dip, your investors may pull their funding for the next round and could harm your reputation. It allows you much greater security if you know that you can trust your investors to help pull you back up out of a rut, rather than to kick you when you are down.

Be especially careful in choosing a lead investor. This is an investor that will provide at least 15% of your funding. If you choose the right lead investor, the rest of your funding will fall into place much more easily.

Look for leadership qualities (hence, a lead investor), such as one that has a solid reputation, financial stability, and a proven track record for investing in companies that have proven successful over time. Additional reputable, capable candidates are more likely to trust an investor who has these traits.

You will find it much easier to locate your next investors and to secure funding without a hard sell if your lead investor is not only qualified to fund your business but also qualified in their leadership abilities, as well.

Creating a mobile app business plan before you get too deep into the app development side of things will help bring everything in focus. Without a firm plan in place, you’ll end up making important decisions on the fly, which might potentially run your app into the ground before you get a decent footing.

Successful entrepreneurship depends on much more than your initial investors. There is a lot that goes into starting a successful business and maintaining its’ growth.

To learn more about entrepreneurship in Australia, be sure to check out this post!