How to Secure Funding From International Investors

HOW TO SECURE FUNDING FROM INTERNATIONAL INVESTORS

Most startups struggle with getting capital with strongly affects the business’ growth. Study shows that 9 out of 10 startups fail and a lack of sufficient capital is one of the reasons why they do. With capital, you get the needed head start towards building a successful business.

It is very important for a start up to raise enough capital in order to ensure that they have a shot at being successful. With enough cash before implementing their business processes, they have a better chance for business survival. Since study shows that lack of cash accounts 30% of a startup’s failure, it is therefore important to have funds available before attempting to scale up the business or even expanding the business operations.

As a business owner, whatever your plans for your business are. You can get funding by seeking out business investors that are looking for profitable investments opportunities. The good thing is they are not only looking within their country, but they are also looking at other countries as well. You can fund your business by looking out for international investors.

4 Tips to Help You Secure Funding From International Investors

Prioritize documentation and compliance.

Your region determines which documentation and compliance process you have to do. Register your business with the relevant authority, ensure that you complete the documentation required. Investors want to be sure that your business complies with the regulations that apply in your region. That way, they have some sort of guarantee on their investment. They are sure that their investment will not be compromised if you break the rules.

The documentation makes you prepared and ready to begin your business as soon as you have the investors that you need. It makes you deal ready as well. Have a detailed description of your competition, pricing and financial model, organizational structure, company leadership, and product, along with any related documentation. Once you have these, your business is ready to roll.

Also read: How to Perform a Basic Accounting Audit

Be conscious and cautious of fees and charges

One way to find international investors is to use a finder. A finder is a company or individual that assists businesses to locate possible or potential partners or investors. They make it easier to secure funding for a business at a cost. Their fees could be exorbitant so you need to be conscious of such fees and charges.

A business owner seeking funding should also have knowledge of the Forex Market and how it works. How banks rate affects currency pairs. Beware of recurrent charges, such as taxes and annual fees that your investors will have to pay before and after making an investment agreement with your company. Whatever fees and charges apply to any of your choice, anything above 10% of the funding should be considered excessive.

Take advantage of technology

With technology, there is a change in the way investors can interact with potential businesses.  With technology, investors and business owners do not need a third party to connect them together. There platforms that allow investors to invest in businesses outsider their home country without intermediaries. With the right platform, there are people who are interested in an investment opportunity regardless of the location. So take advantage of technology in order to connect to potential investors.

Explore networking opportunities

You should lookout for any opportunity that gives you a platform or an avenue to network. There are events that provide global investors and local small businesses with a meeting point to interact. There are intermediaries that also provide a platform for businesses and potential investors to interact. These platforms serve as some sort of protection in order to reduce risk and build trust.

Advantages and disadvantages of foreign funding

Advantage

  • You have more funding options. Most startups find it hard it find funding from traditional banks and other lenders for their business. This could be due to a number of reasons such as not having a credit history or because it is difficult to access domestic funding. You have more funding options for your business with international investors.
  • It helps build your network. Networking is vital to business success, your relationship with an investor could open opportunities to collaborate or partner with other investors in other regions. Sometimes, all it takes is having a strong relationship with an investor will help doors of opportunities.
  • Your interaction with the foreign investors can bring fresh and diverse perspective to your business. You could get new insights into certain aspects of your business; it can have an impact on your business success.

Disadvantages                   

  • Communication barrier is a major disadvantage. There could be translation errors while communicating, time zone difference that could further affect communication.  If your native language is not  
  • There are practical communication barriers. From time zone differences to translation errors, it can be tricky to communicate with overseas business partners. Clear and transparent communication is essential to the success of any investor-investee relationship, so before you seek international funding, you need to have a good handle on the language (if different from your native language) and how you will schedule and conduct check-ins with your investors.
  • It has higher risks. While foreign funding might have high returns, it can be a risky choice and is best used as an alternative to longer-term funding. For example, currency and economic changes can both impact foreign aid investment.

  • You’ll have to navigate cultural differences. Anyone who’s conducted business overseas knows that cultural differences can have a big impact. Business customs and standards vary by country, and if you’re not familiar with those nuances in a given location, you might strike out when you pitch a foreign investor.

  • There are practical communication barriers. From time zone differences to translation errors, it can be tricky to communicate with overseas business partners. Clear and transparent communication is essential to the success of any investor-investee relationship, so before you seek international funding, you need to have a good handle on the language (if different from your native language) and how you will schedule and conduct check-ins with your investors.