Virtual startup investing has become much more prevalent in 2020. With the restrictions in place, both entrepreneurs and investors have had to find ways to be creative. If you’re a small business owner, it’s probably still as easy to raise money from friends and family as it has been in the past. But if you’re looking for outside investors? The lack of in-person trade shows and conferences is a big hurdle. If you’re not located in the same state, you may not be able to travel without quarantining for 14 days before your meeting. And from the investor’s shoes, you’re being asked to invest a lot of money with a founder you’ve never actually met in person.
Virtual Startup Investing in 2020: Business Owners
If you’re a business owner, have you found creative ways to reach out to possible investors? The Wall Street Journal had an article this week with a variety of views on the current situation. Some entrepreneurs have found all-new ways to connect with investors, including signs on the side of a road to memorable presentations on Zoom. As one business owner, Phil Libin, pointed out,
You have to at least be the most entertaining thing that [investors have] seen this month if not this year.
This has led to some interesting presentations online to investors. The challenge being overcome is that some of these businesses have physical products that they are seeking to launch. For example, Tellus CEO Tania A. Coke explained,
We have a hardware company and people want to touch and feel your product, especially at this early stage. We aren’t in a place where we can just send a product in the mail.
Depending on the type of business you are in, you may need to be especially creative in 2020.
Virtual Startup Investing in 2020: Investors
Investors are also in an interesting situation. They are being asked to sign million-dollar contracts that could last for years. In the past, they would at least get the courtesy of a cup of coffee or a handshake. But these days, millions of dollars are changing hands in a virtual environment. In order to make these deals happen, investors are spending more time on the research phase. This has minimized the role of the founder’s “charm” and personality. Arguably, deals made in this fashion are built on a more solid foundation.
Not all of the virtual startup investing is happening without some kind of in-person meeting. There are still plenty of investors who won’t make an investment without some type of in-person interaction.
No matter which side of the equation you are on, investments in small businesses are still happening. It’s a different way of forming the relationship, but with some creativity, you can make it happen for your business as well.
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