After starting a business, one of the first problems many new entrepreneurs face is a lack of funding that restricts their ability to scale up. To attract investors, you must first prove your business model will solve a unique problem and how your investors will benefit in various ways.
Peter Leighton co-founded RE Royalties to apply the well-proven royalty financing model to the renewable energy industry. While they were in an enviable position –– as a first-mover in the renewable space –– when the time came to raise money, the classic chicken and egg problem was evident. As a startup, they needed to prove the business model to attract capital. At the same time, they needed capital to attract renewable energy clients so they could grow.
Since the company’s inception, Leighton and his team have learned how to attract investors and scale. As a result, they combined those lessons to raise money through a new RE Royalties Green Bonds offering.
Here’s a look at their lessons learned encapsulated in five practical ways startups can attract investors.
1. Raise an initial ‘friends and family’ round
For most entrepreneurs, the first funds raised come from friends and family who believe in the individual and the idea. RE Royalties took this path to raise their first funding round alongside issues shares in the company when they went public on the TSX Venture Exchange.
Not only can friends and family provide initial funding, but those that match your qualified target audience can offer a standard measure of viability as you approach additional investors.
2. Create brand visibility
Brand visibility is critical to attracting new customers and future investors. If potential clients or investors are unaware of your business, there is little chance you will be able to grow and scale.
Social media is a high reach and cost-effective path to increased brand visibility. Popular platforms such as LinkedIn, Instagram, Facebook, and Twitter, can all elevate brand awareness.
In addition to developing a social media marketing and branding strategy, attend relevant and targeted networking events and conferences to meet industry peers and network with future clients and investors.
3. Remember, content is king
An online presence designed to elevate brand visibility will require consistent and high-quality content to attract interest and advocates. Startups can accomplish this by creating a blog and sharing relevant industry content through social media. Targeted marketing campaigns can promote offers and drive potential investors to your website.
4. Refine your business plan and elevator pitch
In hindsight, Leighton believes RE Royalties would not have been successful without a business plan. After you move beyond raising funds from friends, family, and initial investors, you can no longer rely solely on your personal reputation.
You must impress people who know very little about you. It is essential to produce a business plan and express your value proposition quickly and concisely. The bottom line: You also need a compelling elevator pitch.
A standard business plan should include:
- financial information that speaks to your business’ viability (ROI);
- market research that details opportunities for growth;
- the size of the market;
- potential competitors;
- and your approach to compliance, transparency, and governance.
Investors need to believe you will use the same prudent approach to protecting their investments that you would use to safeguard your own money.
5. Build a strong and effective team
At the early stage, investors are investing in the team as much as anything else. They need to have faith you can execute and deliver on your plan. RE Royalties had many successful entrepreneurs and family offices who were also early investors. They invested because they believed in our teams’ ability to deliver. Leighton insists that his single biggest motivator is a drive to reward his team for their faith and support.
Peter Leighton is an experienced renewable energy executive with over 20 years of experience in project development and mergers and acquisitions in the energy sector. He is the Co-founder and Chief Operating Officer of RE Royalties, an innovative finance company specializing in renewable energy. With climate change a pressing issue globally, RE Royalties has become an important source of capital for renewable energy projects. In 2016, RE Royalties officially launched as the first company to take the royalty-financing model, well proven in other industries, and apply it to the renewable energy sector. RE Royalties is a publicly traded company on the TSX Venture Exchange under the symbol “RE”.
© YFS Magazine. All Rights Reserved. Copying prohibited. All material is protected by U.S. and international copyright laws. Unauthorized reproduction or distribution of this material is prohibited. Sharing of this material under Attribution-NonCommercial-NoDerivatives 4.0 International terms, listed here, is permitted.