Finding investors for start-ups: how to turn customers (and potential customers) into investors

ricerca investitori per startup

Finding investors for startups is the crucial issue that determines their ability to survive and then grow and become solid enough to produce wealth. There are many possible sources of funding for a startup, but funding a startup does not mean choosing one, but rather knowing the dynamics of each and combining them according to the stage of development and the specific needs of the company from time to time.

Most sources of funding for startups involve the participation of external entities such as banks, business angels, venture capital funds, startup accelerators, and the like. The most crucial factors in searching for investors in these cases include identifying the entity most suitable for one's type of business (in terms of interests, assets, investment type, level of involvement in the company) and presenting one's business idea optimally.

These sources must be complemented by crowdfunding, which keeps all command of operations in the hands of the company and also requires finding investors on its own. Therein lies the fundamental secret of finding investors for startups that will also be valuable outside of crowdfunding for a company's everyday marketing activities.

Seeking investors with crowdfunding may seem more complicated than other avenues, but it is quite the opposite-"if you know how to do it"! Already intuitively, it is easier to convince many people to invest small sums rather than just one to invest a very large sum, because the risk you are asked to take is less. If on top of that we add that the best crowd investors for startups are the customers (or potential customers), we can see how you have many more levers at your disposal to incentivize them to invest and you get many more benefits than "mere" funding.

Why customers or potential customers are the best investors

One of the most common questions asked by entrepreneurs who approach crowdfunding with distrust is "why would nonprofessional strangers invest in my very business?"

They won't, in fact, unless you've invented teleportation or a cure for cancer. The report of the Milan Polytechnic's Crowdinvesting Observatory proves this unequivocally: less than 1 percent of people who invest in crowdfunding invest in 10 or more campaigns, while 76 percent invest in only one campaign and 86 percent in no more than two. Thus, there are no "pure" investors, who go to a crowdfunding platform aimlessly and choose a few random campaigns to invest in from those they like.

But professionals won't be lining up either: there are plenty of startups as bright and full of potential as any startupper considers his or her own.

The key, then, is to shift the focus: neither strangers nor professionals. The search for investors for your startup's crowdfunding campaign must target your customers and potential customers: people whose data and contacts you already have, in the first case, and whose profiling characteristics you know, in the second case; in both cases, people who definitely have an interest in your company for the product or service you offer.

In their comparisons, therefore, you have important levers to exploit to convince them to invest. Let's see which ones.

How to optimize investor search for startups with crowdfunding

The next objection of the entrepreneur wary of approaching crowdfunding is "but my clients will never invest in my company!"

Not unless you give them a reason to do so. Tax deductions reserved for investors in startups are not sufficient leverage, because they benefit investments in any startup, so they do not give you a competitive advantage over others. The real leverage to be exploited is called "reward", with a clear reference to reward crowdfunding, the principle of which can (and should) also be applied to finding investors in all other types of crowdfunding.

The reward is a prize that is offered to investors and must have the character of uniqueness: it is an exclusive privilege closely related to the product or service sold by the company, thus of definite interest to the company's customers or potential customers, and which can only be obtained by investment.

Another key feature of the reward is that it should provide an incentive to invest as early as possible: those who invest before others should receive a larger reward. In this way, it will act as a driver to drive up the crowdfunding campaign counter.

There are three main types of reward, which are not mutually exclusive but rather should be combined to achieve more effective results.

  • Product rewards: discounts or cashback on the purchase of the product or service sold by the company, or free gifts. Most useful for attracting new customers or re-monetizing current ones.
  • Economic rewards: discounts and incentives on the investment itself (e.g. higher deductions, more shares, shares with higher property or administrative rights, higher interest, etc. for those who invest by a certain date).
  • Experiential rewards: exclusive content (e.g., webinars), opportunity to attend a production stage, meeting with the team, etc.

By combining the three types of rewards depending on the product or service in question and the characteristics of the stakeholders, it is possible to package powerful levers to investment, because the potential investor is offered an immediate gain, which anticipates the gain he or she will be able to get from the return on investment, which is far in time and not completely certain.

Using reward is key to turning customers and potential customers into investors for your startup, because it allows you to do a marketing campaign at maximum efficiency because of these three characteristic elements:

  • Uniqueness of the offered reward;
  • time limitation of the offer;
  • competitive advantage (there probably won't be any of your competitors doing a crowdfunding campaign at the same time).

Crowdfunding, in fact, as we cannot remember enough, is really a marketing tool rather than a financial transaction, and this is what makes it unique from other ways of finding investors for startups.

Reward is the mantra of Turbo Crowd, Italy's first crowdfunding marketing agency. To learn more about the mechanisms and to put them into practice, you can book a first free consulting with us!

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