Shark Tank Survival: Investment Tips for Entrepreneurs

Investment tips from the sharks

Here are some investment tips from successful entrepreneurs for business owners who need funding so they, too, can swim with the sharks.

1. Try to keep your equity.

“Exhaust all sources of funds before giving away equity. It may seem like equity is cheaper — there’s no interest, right? But you’ll pay your equity partners forever. While debt may seem riskier, if you believe in your business, you should take on as much debt as you can stomach before giving away any equity.” – Ian Jackson, CEO of Enshored [Read related: The Difference Between Debt and Equity Financing]

2. Gain traction first.

“If you already have a working product, obtain and showcase as much traction as you possibly can. In the investment world, ‘traction’ is the magic word. Traction can be many things. It can be registered users, paying customers, press articles, having a large audience, letters of intention, partnerships, or even a very small group of people who couldn’t live without what you are offering. Traction is the most effective way to prove that your solution creates interest and is monetizable.” – David Arnoux, co-founder of Growth Tribe

3. Test your product.

“Do test your product at the POC (proof of concept) level with a few test customers through a joint development program. This helps to create faith in investors that there is demand and also helps you build a product that will see quick adoption from the market.” – Som Singh, Ph.D., founder of Unspun Consulting Group [Here’s how to test your business idea before launching]

4. Control your risk.

“Determine what percentage of your account that you want to invest on any given trade. [If you were to] divide your portfolio into slices of pie, make sure to have a large portion left if an investment goes against you. It doesn’t make sense to over-allocate or use leverage if the negative consequences are catastrophic to your account. Many professionals never risk more than 3 percent to 5 percent of their account, so when they are incorrect, in excess of 95 percent of the account is intact.” – Alan Knuckman, chief marketing strategist at Bulls Eye Option

5. Research the competition.

“Know your competition inside and out. Know their strengths and weaknesses, know who the main game players are, know everything. Always be ready for a plan of attack when things don’t go your way.” – Michael Bolger, advisory board member of Driftr

6. Try networking.

“Attend events where you meet potential investors, such as Global Entrepreneurship Week. These are ideal events to network and present your business and ideas.” – Ian Aronovich, co-founder and CEO of MedaDoc and co-founder of SourcePlay

7. Split your funding.

“Split investments between ‘now’ money and strategic money. Why? ‘Now’ money allows you to keep the momentum going strong, while strategic money allows you to take your business to the next level.” – Brian Marvin, founder of Eavesdrop!

8. Ask your family.

“Raise money first from family and friends. Odds are that none of them want to give you money, but you’ve got to try. If your business idea can’t raise money from people who know you and trust you, you’re going to have an even harder time raising money from strangers.” – Dan de Grandpre, co-founder and CEO of DealNews

More tips and advice for a successful investor search

Entrepreneurs often have more potential support than they realize. Here are a few tips and resources you may not have considered. 

1. Use crowdfunding platforms to look for investors.

Crowdfunding is a helpful avenue for entrepreneurs who need investments. Each crowdfunding platform is specialized for certain funding needs. For example, with donation-based crowdfunding like GoFundMe, crowdfunders don’t receive a return for their donation, whereas reward-based crowdfunders, like Kickstarter and Kickstarter alternatives, expect to receive a reward for their contributions. 

With equity crowdfunding, an investor takes some ownership of the company in exchange for their investment. Alternatively, with peer-to-peer crowdfunding services, companies will match those in need of investments with investors.

2. Use SBA resources.

The Small Business Administration (SBA) offers a lender-matching tool that can pave the way for business owners seeking investors. This tool matches businesses with SBA-approved lenders. In addition, the SBA helps secure business grants and offers SBA loans for those who qualify. The organization also provides online courses and tools to help entrepreneurs grow their businesses. 

3. Contact people in your line of work.

Existing networks are an easy way for entrepreneurs to connect with possible investors. While results won’t be immediate, contact your connections in your industry to gain insight and find leads. Colleges and universities are also excellent resources for funding, as schools often invite and have relationships with experts in various fields.

4. Design a solid business plan.

When seeking investment for your business, you’ll need to have a well-thought-out and well-developed business plan. If you’re pitching potential investors, they’ll want to understand your company, its mission and your road map for it. Creating a business plan might take time, but it’s a crucial document to have when securing funding. 

5. Seek angel investors.

Angel investors typically fund early-stage startups in exchange for equity in the company. These individuals or groups are often accredited by the Securities Exchange Commission, or SEC, and have the necessary knowledge and finances to help your business thrive. With their financial support, you can usually launch your business more quickly. 

Securing investments as an entrepreneur

As an entrepreneur, you’ve likely learned that securing investments is one of your primary challenges. To get your business off the ground, you’ll inevitably need the proper funding. However, if you lack the finances yourself, it can be difficult to launch your company. 

Thankfully, investments are possible to land — especially if you’re prepared. The above tips will help you attract and secure the right funding, so your business has the full potential to shine.

Sammi Caramela and Brittney Morgan contributed to this article. Source interviews were conducted for a previous version of this article.