How to Find Investors for Your Business in 2021
Updated: Sep 15
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If you’re starting your business from scratch, you’re probably interested in ways you can get capital - including finding investors. In this article, we’ll go over five ways that you can find people willing to invest in your small business!
Here are the 5 different tactics that you can take to find investors for your small business:
1. Ask friends and family to invest in your business
A common tactic that many small business owners take, especially when they are first starting out, is to ask their family and friends to invest in them. This can be a great way of getting start-up capital to get going, as it’s often difficult to find funding through traditional financial institutions for businesses younger than 2 years.
There are several reasons why running a friends and family fundraising round might be preferable for your small business. For one, your friends and family are a built-in support system. They already believe in you, and are more likely to want to invest in your business. You also have the chance to negotiate terms, and potentially could end up with less debt.
However, some words of caution about asking friends and family for capital for your business: there is also potential for this sort of relationship to result in conflict, as well as long-standing money and control issues.
This is why it’s important to only ask family and friends to invest in your business if you know that they are in a good financial position to risk spending their money on you. It’s also best practice to be clear on your terms for the loan or investment, and take precautions to that end, to make sure there is a fair relationship between you and your lenders.
2. Look to your network of small businesses to invest in your business
Your network of peers in the small business world can be another valuable resource for finding investors. Often, small businesses that are tangentially related to your business, or are in your market but not direct competitors will want to invest in you.
Why? Well, small business owners want to see others like them achieve - having a strong small business ecosystem benefits everyone in the community. One example of this is Cleveland’s Scoot! Cold Brew, who invested in another local small business in their community, Pierogi Pantry. Both businesses ran Honeycomb campaigns, and were able to easily invest in each other through the platform.
Businesses like Pierogi Pantry have found business partnerships and investors through their Honeycomb Credit crowdfunding campaigns!
Investing in your business might also open up opportunities for partnerships between their business and yours. For example, if there is a business that is a unique sort of supplier to yours, they might invest in your business with the intention of opening up a partnership where you could use their product in your business operations.
3. Enter a small business incubator or accelerator program
Another great way of connecting with investors for your small business is by entering an incubator or accelerator program. These spaces specialize in helping give small businesses a boost, connecting them with business and marketing expertise as well as opportunities to scale up their business.
Some accelerator programs have investor opportunities built-in to their curriculum. This is a great way of connecting small businesses with investors who are interested in small businesses, and might otherwise not have known about a small business working on their own.
There are some incubators that are locally focused, others specialize in a specific industry. Union Kitchen, for example, is a business accelerator in Washington, D.C. that works with businesses in the consumer packaged goods industry. Small businesses such as 8 Myles frozen macaroni and cheese use the resources - commercial kitchens, packaging equipment, marketing expertise - that Union Kitchen provides to help scale their business.
8 Myles worked with Union Kitchen to the point that they were growing so rapidly, they needed to find capital! Thanks to a partnership with Honeycomb, Union Kitchen introduced owner Myles Powell to Honeycomb, where he was able to run a crowdfunding campaign that raised $36,200!
4. Are angel investors or venture capital right for your small business?
Other small businesses seek out equity capital through what’s known as angel investors or venture capital. However, venture capital only really makes up about 2% of small business financing.
Angel investors are investors who support small businesses they expect will rapidly grow in valuation. Typically, they want to have a more hands-on relationship with the businesses they invest in, so they’re usually local, and have lots of business experience that they can draw upon to advise you.
You can find venture capital or angel investors in your community primarily through networking. Another potential resource could be your local community development organization or small business development center, who might have connections to such investors.
It is important to consider that most of the time these kinds of investors are seeking out equity, meaning you’ll lose out on profits and ownership of your small business.
5. Crowdfund your growth to find investors for your small business
An easy way of connecting with investors for your small business is by running a loan crowdfunding campaign!
By running a campaign with a loan crowdfunding platform such as Honeycomb Credit, you can connect not just with people already interested in investing in small businesses, but you can turn your most loyal customers into investors.
A crowdfunding campaign is a loan, so you’re not losing equity in your small business, so you can raise money for your business while continuing to make your own business decisions and keep the profits.
Crowdfunding with Honeycomb is not just a great way to find investors, but it’s a powerful growth tool for your small business. On top of raising capital, Honeycomb campaigns act as a unique marketing tool that gets your business national attention, and strengthens your relationship with your customers by turning them into investors.
Local investors, expert small business helpers
If you landed on this blog post, you obviously are ready to grow your small business. Do you know the right kind of investor for your small business? Honeycomb Credit can connect you with our network of thousands of investors passionate about small businesses like yours.
Learn more about Honeycomb Credit crowdfunded small business loans at www.honeycombcredit.com/grow and fill out the form below for more information!