Who Should I Ask to Invest in My Small Business?
When you’re looking to start or grow a small business, one way of funding it that you might be considering is finding investors. But where can you find investors? Here are some common ways that small businesses seek out people to invest in their businesses, and how you can make connecting with them easier.
Family and Friends
Often when they’re starting out, entrepreneurs might look to family or friends to invest a bit of money in their business. They could take out loans from them, or offer equity of some sort. There are some positive sides to asking family and friends to invest - after all, they’re who believe in you the most. Of course, there are also its own host of potential issues, as mixing money with personal relationships can create, especially if you don’t involve a third party or any legal safeguards.
One way that you can seek out investors is to ask any connections you have in your industry’s network if they have any interest. Often, businesses at different stages of the supply chain like to invest in each other in order to support the value chain. One such example is Western Reserve Distillers, who found an investor in a local malt company through their Honeycomb campaign. Honeycomb Credit allows small businesses like this distillery to raise small business loans from their community through crowdfunding. Western Reserve Distillers ended up raising $100,000 for their distillery’s expansion in 2021 thanks to this investment and 56 others.
Industry connections are a great place to start when looking for investments in your business. Maybe you’re a coffee shop, how about you ask a local coffee roaster you use? Or if you’re a farm, seek out investments from a restaurant who sources from you.
Other Small Business Owners
You can also reach out to other small businesses on your street to invest in your business. Often, small business owners want to see others like them succeed, because a thriving Main Street means success for all small businesses.
Squash the Beef Vegan Catering, a Cleveland-based vegan soul food catering business, ran a Honeycomb campaign in 2020 to purchase a food trailer. In 2021, they invested in Carter’s BBQ, another Black-owned business in Cleveland that was also raising funds on Honeycomb to purchase a food trailer. Even though their businesses differ on meat-based options, Squash the Beef saw the value in investing in another business in their community, leading to value for both them and Carter’s BBQ!
Your customers are some of your biggest fans, so why shouldn’t they invest in you? Without a platform like Honeycomb that allows individuals to invest in small businesses, it might be a bit awkward to ask your customers to invest in you, but Honeycomb’s crowdfunding platform makes it easy to connect with customers who already love you and would love to invest in you.
Also, inviting your customers to be investors in your business is a great way to improve your relationship with them and improve customer loyalty. When customers invest in a business, they become brand advocates, giving them more business, telling their networks about the business, and supporting them however they can. So, it’s a win-win! You get investments from the customers who love you the most, and you get to have a closer relationship with them, too!
Your Whole Community (a.k.a. Your Future Customers)
Running a Honeycomb campaign is also a great way to invite your wider community into your business. Giving an investment opportunity through crowdfunding, which is an incredibly new concept, also attracts a lot of attention to your business and can be a powerful marketing tool. Someone in your community might find out about your business because of your campaign, and be compelled to visit you before you invest. Bam! You’ve got a new customer and a new investor!
The Honeycomb Investor Network
Finally, if you run a Honeycomb campaign, you can attract national attention to your business thanks to our network of thousands of small business investors. If your company is compelling enough to someone, perhaps if they have a mission of supporting restaurants, or women-owned businesses, or if they just plain think your business has what it takes, an investor across the country might invest without ever having even been to your business!
You never know who in your life wants to invest in your business - why not give them the shot?
Honeycomb alumni have reported everyone from their uncles to their fourth grade teachers have invested in their crowdfunding campaigns.
Who in your circle do you think would love to show their support for you? Who do you know who you’d love to pay back for their support of your business? Learn more about Honeycomb crowdfunded small business loans by filling out the form below.