Investment is the blood of any startup that is vital for its smooth functioning. However, investing in startups is a lot more than just buying stocks.
A report by IBM (Institute for Business Value and Oxford Economics) stated that around 90 percent of the Indian startups fail within the first 5 years of their inception due to the lack of innovation.
Truth to be told, many entrepreneurs themselves believe that post the initial ideation, the startups fail to scale because they lack funds, strategy, or strong leadership. More often than not founders or the owners of small businesses place too much focus on raising money, rather than emphasizing the value that each investor can bring to the table.
So how can an investor add value to the startups beyond making investments into the company?
- Financial Aid & Funding
Needless to say that backing startups with finances are often a huge advantage if you are an investor. By providing capital and financial aid, an investor adds immense value to a startup. But, it would be beneficial for the startup if an investor brings more than just money to the table.
As the initial years are crucial for small businesses, investors can help MSMEs and SMEs with their deep industry insights and mentorship. They can help young entrepreneurs in the early stage of the business and guide them to success.
- Strategic Planning & Decision Making
Customer satisfaction, cost-effectiveness, and relevance of the product or service in the target market are often lost in the struggle to scale. A seasoned investor who has gained expertise with years of experience can lay a crucial role in decision making.
By making available strategic planning, investors can also help in achieving market penetration and profitable operating ratios.
- Network Creation
For small businesses, it is essential to gain access to the right people at the right time in the early stages. An established investor can help in the creation of valuable connectivity to the potential customer or the right talent pool.
Young entrepreneurs who hail from tier II or III cities struggle in finding the right investors and right talents due to the limited access. Hence, investors can help small business owners by being the mediator in business talks. They can also help entrepreneurs in grooming and incubating new profitable ventures to help them grow.
- Visibility & Credibility
To add and increase the overall value to an innovative startup venture media attention and access to established domains are required. Hence, an investor can help to build associations with industry doyens, which results from a startup gain visibility and credibility in the market.
Making introductions, build meaningful & profitable associations, giving insights, an investor can do more than just buying the company stocks. With their immense contribution, they can increase the chances of that company`s success.
If you think about it more deeply, why an experienced investor shouldn`t help the startup he is investing in? Want to know how you can find an investor for your business?
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