How to find an investor for MLM business

Often, the stopping factor when starting a new business is the lack of finances to bring the idea to life. Novice entrepreneurs, without their own funds to create a company, do not even consider seeking external sources of funding. Considering years of experience in implementing companies from scratch, the FlawlessMLM team is ready to share tips on how to attract investors' interest to a startup.

Develop Your Personal Brand

Today, it is not enough to just present a business plan - the individual is a priority. Competition stimulates attracting attention to new projects in every possible way, including promoting the personal brand of business co-founders.

Developing a personal brand is working on the individual's recognizability, expertise, and influence. Promoting a personal brand has become a trend in recent years, regardless of the field.

By building a personal brand, you can not only attract the interest of the audience but also create a strong association between yourself and your professional activities. In addition, you will strengthen both your reputation and the company's reputation, increase trust and loyalty from investors and future partners.

According to the experience of the FlawlessMLM team, clients' projects with a well-developed personal brand are promoted much faster, attract and engage the audience, receive attention from future clients, partners, and investors even before the official launch.

Share your personal values, life principles, conclusions, and thoughts related to self-realization as an individual and as an entrepreneur. Create content for social networks, blogs, thematic platforms, do not be afraid of interviews or speaking at thematic conferences.

Implement a test version of the project

The easiest way to attract an investor is to demonstrate a model of your idea. It is important to implement a "demo version" of the business as qualitatively as possible, as it will serve as a portfolio.

Often, renowned investors do not even consider projects that cannot be "touched". However, the more complex and global the business idea, the more resources will be needed to implement its model. For example, before turning to an investor, in the realities of Silicon Valley (the world's technological center), startups invest at least $10,000 in implementing a demo version.

By launching a test version of the company, you can analyze the demand, viability, and development prospects of the enterprise. An experimental business project will reveal gaps, mistakes, and conditions under which the business risks failure. But remember that when you start to bring your idea to life, you subject yourself to a kind of test, facing all the difficulties in the process of creating a company.

Simultaneously with testing, you can start making money from the first sales, gradually scale and develop. Launching test sales is appropriate in any circumstances, as investors prefer projects that have initial product sales and demonstrate growth.

If a startup only has a business plan, an investor may request a 40% stake. But when a demo version of the project is ready (product developed, sales channels set up, team formed), and funds are only needed from the investor for scaling, the stake may drop to 5-15%.

Find Like-Minded People

The optimal start option is a shared participation in the project - developing the company with like-minded people as co-founders. Potential co-owners should not just be passionate about the idea but also possess professional or financial resources.

To attract like-minded individuals, you can make posts about your project on thematic forums and platforms (for example, ideaswatch.com, angel.co, startuppoint.ru). Even if potential partners do not respond, you will receive feedback and advice regarding further development.

Such sponsors are hard to find because everyone is afraid to invest in a dud and lose their money. In addition to a decent presentation of the idea, it is important to provide partners with certain guarantees. Propose to enter into an official partnership, pay a minimum monthly or quarterly contribution (similar to a salary) to increase loyalty to your activities and reduce risks for like-minded individuals.

At the early stage, distributing shares in the company should be done very carefully. Being too generous and giving a large percentage to small sponsors, a promising startup risks becoming unattractive to experienced investors.

According to InVenture, venture partners agree that at the pre-seed and seed stages, an entrepreneur should not give away more than 20% in total ownership so that the founder's stake is not significantly diluted in the future, and the company remains attractive to large investors.

Introduce Yourself in Business Incubators

Today, business incubators are becoming increasingly popular. Around the world, such organizations actively help and support aspiring entrepreneurs. If your ventures are promising but you need financial and advisory assistance, boldly introduce yourself.

A business incubator is an organization that supports aspiring entrepreneurs and contributes to the comprehensive development of projects. The main goal is to help businesses thrive.

Currently, there are over 300 similar organizations only in the Russian Federation, and their number is increasing every year. Good business incubators not only sponsor projects, but:

- provide office space for a minimal fee;

- provide legal and business consultations;

- provide connections (relevant for CIS countries);

- fund educational events and masterclasses from experts and mentors with a worldwide reputation;

- help attract funds for the project through grants, competitions, and tenders;

- contribute to attending industry events, participating in exhibitions, and conferences.

But it is important to understand that assistance in development comes at a cost. Commercial business incubators, unlike governmental ones, will provide high-quality services in "growing" your company, but they will have certain claims to your business. Collaboration terms may involve sharing a stake in the business, and if it concerns developing a new technology, the incubator may claim a patent (fully or partially).

Often, startups in the CIS countries are disconnected from the global startup industry because the founders are less experienced and less prepared. In practice, the further the project is located from the Valley, the lower it is evaluated and the more startup founders have to lose.

According to InVenture, Ukrainian incubators Happy Farm and EastLabs require 15% equity in the project for investments in $15-$20 thousand.

Sell Top Positions in the Structure

Equity participation of like-minded individuals is a serious step that can affect the project's attractiveness to large investors. By creating an MLM company, you can avoid such risks and attract capital by selling the best positions at the "top" of the network structure.

In world practice, there are quite a few cases where novice network companies sell positions at higher levels in structures. The cost of payment can reach tens of thousands of dollars.

Thus, you will not only attract investments by avoiding the risks of equity ownership of the enterprise, but will immediately start developing your structure, attracting solvent partners who understand the benefits of network marketing. The benefit for the partner is that he gets the opportunity to learn from the sponsor, who is the best at navigating the marketing of his company, motivated in the efficiency of the structure and the success of the lower-level partners.

Conduct a crowdfunding campaign

In our time, crowdfunding platforms have become not only one of the best tools for raising funds, but also an excellent PR method for novice entrepreneurs. A quality presentation of a project on crowdfunding will attract public attention to the idea, increase the chances of getting into an incubator on favorable terms, or catch the attention of major investors.

Crowdfunding - collective fundraising for the implementation and support of projects of both social and commercial nature. People finance a favorite idea, receiving minimal rewards (company-branded merchandise (t-shirts, pens, etc.), pre-order, or a discount on goods).

According to Massolution's data, the breakthrough for crowdfunding was in 2014: the market for such fundraising grew threefold (by 167%) and reached $16.2 billion. According to the World Bank's forecasts, by 2025, the annual turnover of crowdfunding will increase to $93 billion. Unfortunately, crowdfunding is poorly developed in the former USSR territories, and residents of these countries do not invest in the ideas of their compatriots. More often, citizens of the USA, Australia, Canada, the UK, and the Netherlands participate in such initiatives.

It is noticeable to everyone that there are very few Russian-speaking entrepreneurs in the international crowdfunding market. Often, newcomers are intimidated by the language barrier and the smallest nuances related to the official registration of a company or fund withdrawal.

Kickstarter is the most successful global crowdfunding platform. Commercial projects are more likely to become leaders in fundraising on it. The idea of a "universal" social direction is more relevant to develop on IndieGoGo, which is less known in the CIS countries.

Keep in mind that promoting a non-original project through crowdfunding is very rare. You won't succeed by following the beaten path, as it simply won't grab the masses' attention.

If you are passionate about creating your own company or want to scale it but lack the financial base to implement your idea, the team FlawlessMLM is ready to provide advice on attracting investments based on years of project implementation experience. Contact our manager in the website chat (flawlessmlm.com) and learn more about solutions for your business.