It all starts with an idea, but a great idea alone does not make a startup. When you’re ready to start talking to investors, you’d find out that most venture capitalists and angel investors receive dozens of pitches everyday. Yours might simply just end up in the pile. Attracting investors to what you have to offer entails building a business first. This means actually creating a product/service, providing value, and gaining customers.
The good news is, there are now more platforms than ever to help you find the best investors for that tech startup in Nigeria—and you can actually reach them. Here are five tips to getting the right people to invest in your company.
Start with something
Have a minimum viable product –this can be a proof of concept, prototype or even just some ugly, but functional code, but you must have a product or an advanced mock-up. Then, build a team. And no, they don’t have to be Co-Founders. They can be freelancers, advisers and mentors who are smart, skilled, talented and/or well known.
Learn everything there is to know about what your customers currently use, what solution it provides and how to improve on the current solution. Finally, gain some traction by getting potential customers saying they would buy (or sell) your product.
Identify potential investors
Given the odds of any individual contact resulting in an investment, it’s easy to want to talk to as many people as possible. But given the number of tech companies springing up in Nigeria recently, you can save yourself a lot of time and stress. Simply focus your efforts on the 20-50 investors who are most likely to be a good fit for your company. You can always update your list.
Start by coming up with a list of startup incubators, angel investors and venture capital firms in Nigeria. Co-Creation Hub, the Tony Elumelu Entrepreneurship Program (TEEP), and Wennovation Hub are some examples of startup incubators to add to your list. Invaluable angel investors include Lagos Angel Network (LAN), Chika Nwobi – Founder of 440.ng and investor in Jobberman, Opeyemi Awoyemi – Co-founder at Jobberman and investor in Cashenvoy. EchoVC and Adlevo Capital are venture capital firms with Nigerian interests.
Note: Approach them only if you are a “burning meteor”.
Utilize your networks
Investors receive so many pitches, so it’s likely they would favour companies that are introduced by a common contact. Think about how much stronger an applicant is at your company if he or she is referred by a current employee!
Go through your contact list person-by-person and see if you have any common acquaintances. If so, great! Wait, before you ask your contacts for an introduction, show them how viable your startup is. Ideally, your mutual connection should feel like he or she is doing both you and the investor a huge favour.
Craft an introduction
If you are unable to get someone to introduce you, simply become more selective about who you reach out to. Your emails should prove you’re not just sending out hundreds of cold emails to investors. A typical example is: “I don’t usually do this, but with the knowledge that you invested in tech startup A and B, I thought it would help to reach out and introduce myself.”
While working on attracting investors to your startup, be sure not to send too many cold many mails. Your response rate would be better this way. Be very specific on why you thought they’d be interested in your company.
Give Investors a reason to reach out to you
It goes both ways –as much as you want to find investors, investors also want to find great companies. So, make sure you spend some time putting your best sides out there. Even if your product/service isn’t live yet, you can still generate some attention. Write guest posts for tech blogs and/or start a blog or website.
Now, even with the best tips for attracting investors available, be prepared to get turned down or not get a response. However, never be afraid to follow up in a professional manner. If you don’t get a response in a week, send a quick follow up. Subsequently, strategically follow up with news on a product/service launch, or milestones that you hit.
In summary, investors invest in businesses, not ideas. And though, you may get a lot of “Nos”—but never give up. Soon, there’s going to be a “Yes!”.