I always recommend taking “smart” money but sometimes any money will do the trick. Below are some great sources to find the right investors.
Source: Competitive Research. Create a list of competitors including those that are in a tangential industry. Then do some research on current and past investors. These are individuals who will be familiar with either your business model and/or your industry and can likely provide valuable insight as you go through different growing pains. There are multiple resources you can use to find investors including AngelList and Crunchbase.
Source: Industry Tradeshows. Another way to find “smart” investors is to get the attendee list and sponsors for tradeshows in your industry. This will broaden the list to investors that are interested in this industry including corporate investors who are hard to find because they do limited press releases on investments.
Source: Personal Network. Make a list of family, friends and past coworkers that would highly recommend you. They may not have the money to invest but could know the right people to contact.
A first impression lasts forever! Make sure you are prepared with all necessary documents: teaser, pitch deck and/or business plan. Just like when selling to your customers this is a marketing exercise and you need to craft the right story.
BEFORE you contact potential investors.
Step 1: Try to find someone you know that knows them (LinkedIn is a great resource) to make a warm introduction.
Step 2: Send an introductory email about yourself and idea but attach a professional one page summary of the business plan.
Step 3: Skip the NDA (many investors will not sign) and send them a compelling teaser that shows you have thought through the business, industry dynamics, strategy and financial implications. Once you have hooked them, you can get the NDA before giving away all trade secrets.