If you’re looking to obtain investment capital for your small startup or business, there are a few pieces of advice on how to find accredited investors worth keeping in mind. President Obama signed the Jumpstart Our Business Startups Act (the “JOBS Act”) into law in 2012, which loosened the restrictions on companies’ use of general solicitation to acquire funding from accredited investors. The laws enabling general solicitation were finally adopted by the SEC and became effective in 2013. While the new laws are a game-changer and allow greater opportunities for private companies, it’s important to consider certain points during your search for the right investor.
Develop a List & Reach Out
Finding accredited investors is fairly simple; however, building relationships with investors who are interested in your company and what you can offer is more of a challenge. Prior to the JOBS Act, it was generally illegal for most private companies to publicly solicit their capital raises. However, because the ban on general solicitation was lifted as a result of Title II of the JOBS Act, companies can now publicly crowd-source for investment capital through various general solicitation and advertising avenues. Many new startups that are unsure of how to find accredited investors focus their energies on compiling lengthy lists. However, putting the effort into building a rapport with accredited investors on your list is what generates satisfying results. The new laws allow you the ability to develop an accredited investor list easily through general solicitation, but it’s up to you to foster relationships with those potential investors.
Proceed with an Objective in Mind
Another important aspect to consider in your search is the fact that many investors spend a good deal of time reviewing and screening companies. If a candidate’s company doesn’t look promising, an investor will scrap the potential investment and move on to the next. Sharing your ideas with accredited investors who are interested in the type of business or field you’re a part of is a good way to formulate potentially beneficial relationships. Additionally, making sure aspects of your company, such as marketing, customer service and technical support are strong and workable, is more likely to garner investor interest. In general, keeping your potential accredited investors engaged with your progress and other information that might be useful to them will help you build stronger relationships with them.
During their capital raise, many business entrepreneurs neglect to address common investor concerns or make themselves available. Above all, most accredited investors’ concerns involve the overall viability of a business and what the management team’s plans are for their investment capital. If a company is unable to deliver a solid and reassuring presentation or if they do not show an ability to execute, the chances of acquiring the funding they’re looking for are slim. Responsive and available entrepreneurs generally arouse confidence in their investors. Accordingly, it’s important to make the process seem easy for investors (at least administratively). Show them that you can execute on arranging a capital raise by being available and responsive, because if they don’t believe you can do that, they won’t believe that you can execute on your business plan.
If you’re considering an investor and wish to confirm their accredited status, choose VerifyInvestor.com. Visit their website at https://VerifyInvestor.com for more information.