How to get investors for your business in Mexico

Fundraising is one of the most common ways to scale a business, but how do you get investors to trust your business?

In the business world it is very common to hear that a company “raised capital” that is, that it obtained financing, but do you know what this represents and how it can benefit a business?

If you are interested in knowing more about it, you have come to the right place! Here we are going to explain some basic points about investors, the use of capital, how to look for investors for entrepreneurs and an example that we know very well: ours.

We are excited to tell you that we have become the new unicorn of Latin America after raising 500 million dollars thanks to the support of Insight Partners, who have already invested in Twitter and Alibaba Group; and Tiger Global Management, which are investors in Spotify and Uber, with significant participation from Alkeon and Owl Rock funds.

Grab a pencil, paper, and read on to learn how to get investors for your business. 😉

What is an investor? 🤓

An investor—also called an investor—is a person or company that contributes capital (money) to another business. The objective of investors (in the medium or long term) is to obtain an amount greater than what they invested.

Investors can trade in two ways:

in primary marketsthat is, investing capital in a business.
in secondary marketsthat is, buying shares from other investors.

Whatever the case, the investor can contribute capital in exchange for having a stake in the company, a fixed return or selling his investment laterat a higher price.

What types of investors are there? 👩👨

There are different ways of classifying investors, one of the best known being that based on the level of risk they seek when investing. In that sense, we could distinguish three main types:

risky investor
moderate investor
conservative investor

Let me explain each of these profiles below.

risky investor

This investor already has experience and a lot of knowledge of financial tools and the market. He usually invests in shares, that is, in participation in companies that offer a high expected return, although this implies a greater risk. On average, seeks to receive profits of about 5% a year.

moderate investor

This investor seeks a balance between profitability and risk. He can invest both in stocks (variable income) and in funds (fixed income), depending on the case. It usually makes annual profits of between 10% and 15%.

conservative investor

This is an investor who is not willing to lose his capital, so he prefers a safe return, even if it is small. He generally invests in fixed income instruments, for example private or public funds. Your annual earnings do not exceed 5%.

What is an investor interested in?

The reasons can be various and as different as the types of investors. These are some of the most common interests of an investor.

Obtain a favorable return on investment.
Grow the business in which they invest and thus improve their profits.
Financing an innovative project that generates a high impact in the market.

Not all investors are looking for an immediate return on investmentsome seek to grow a brand or finance an interesting value proposition that not only generates higher profits but also becomes a turning point in the sector in which it is located.

What is an investment for? 🧐

One of the biggest objectives of raising capital for your business is growtha word that encompasses many concepts, depending on the objectives of each company.

For example, for a brand, “grow” can represent increasing the manufacture of products to satisfy high demand and; while for another, “grow” may mean hiring a specialized team, focused on improving the product or reaching new customers.

As you can see, an investment represents a range of opportunitiesdepending on the mission of each company.

Of course, there is something that any business that is looking for financing must have: a business plan. With this document you will be able to show potential investors an overview of what they could get if they put their money into your company.

Learn more…

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The example of Tiendanube

At Tiendanube we know first-hand the benefits that obtaining financing can bring to a business. In history we have received some investments, the most recent, during the summer of 2021, led by Insight Partners Y Tiger Global Managementfor 500 million dollars!

This is a very important milestone in the history of Tiendanube, since this investment It will allow us to continue building the largest e-commerce ecosystem in the region and thus continue fulfilling our purpose: reduce the barriers to entrepreneurship in Mexico, Argentina, Brazil and all of Latin America to zero.

But raising capital also represents a great challenge,, in Santiago Sosa, co-founder of Tiendanube, explains what this investment represents for the company and the positive impact it will generate on business.

Well, now that you know what an investor is and the different types that exist, it’s time to answer the question that many entrepreneurs ask ourselves: How to get investors for my business? Next, we are going to know some ways in which you can obtain capital to boost your business.

How to find investors for my project? 💸

Before getting investors for your business or project, you should do a little search work. Here we tell you how to find investors for your project.

Attend networking events.
Approach business incubators and accelerators.
Go to specialized sites.
Join groups of merchants and entrepreneurs on social networks.
Lean on crowdfunding.

Now I explain a little more about each of the above options.

1. Go to networking events

Lectures, workshops and even meetings with your old colleagues from the university can bring you the opportunity you are looking for. You do not need to bring your presentation prepared, but you do need to know how to generate interest in the other person and from there leave with a following agreed meeting.

2. Approach business incubators and accelerators

Going to these spaces will not only open your eyes to what your business idea needs, but you can also find ideal contacts and financing groups for your venture. There are private and public incubators and accelerators, consider which is the best option for you and go to their offices.

3. Enter specialized sites

Believe me or not, there are specialized sites such as the Mexican Network of Angel Investors where you can upload your project and send it to more than 1,500 potential investors. And like this there are more spaces, such as AngelHub or the South American Investment Network.

4. Join groups of merchants and entrepreneurs on social networks

Social networks were not only created to share memes and photos of food. Look for groups in the sector of your business or entrepreneurs in your area and join them. See what their posts are about and consider how to talk to them to generate interest in your project.

5. Lean on the crowdfunding

If you already have a strong community on social networks, lean on crowdfunding pages and get the investment you need. You can also share it with friends, family and thus viralize your entrepreneurship project.

Join the largest community of entrepreneurs! 🚀 We will keep you updated with the best content, tools and news from the entrepreneurial world.

How to get investors for small businesses? 😯

If you have an incipient venture and you require capital to expand your dream, here we give you certain steps to follow to get investors for small businesses.

Explore possibilities with other entrepreneurs
Work on a business plan
Do a financial analysis
prepare your speech
Close the deal and commit

Let me explain each of these points in detail below.

1. Explore possibilities with other entrepreneurs

It probably sounds a bit obvious, but they say that “by asking you get to Rome”. If you don’t know where to start, reach out to other entrepreneurs and ask if they know of any investors who might be interested in your business. On many occasions, people with more experience can facilitate the search.

2. Work on a business plan

He is a document that cannot be missing in any company, regardless of the stage in which it is found. This document must contain an in-depth analysis of the market to which the company belongs, details of cash flows, projections of return on investment, among other relevant data so that investors can have a clear vision of the business and its potential.

3. Do a financial analysis

Before presenting your idea to any type of investor, do a thorough analysis of the money you need and how you are going to use it. Think of the best and worst financial scenario, and consider a cushion for everything, it is better to raise more money than you need, than to fall short.

4. Prepare your speech

The pitch or speech with which you will present your plans and ideas to an investor. It should be strategic, realistic, concise and captivating. It is recommended to start by stating the problem, the solution, talking about the current market, presenting your business model, company data such as the team and sales and marketing strategies, future projections and finally, a personalized investment proposal.

5. Close the deal and commit

Congratulations! If you have found the investor for your business, the only thing left is to get down to work to achieve the objectives that you and your investor have in mind. Prepare monthly or quarterly reports to give your investor context of how the financed project is going. This will give you certainty and vision to keep calm that everything is under control.

If you didn’t manage to close the deal, don’t worry! Work with the feedback from this experience and continue looking for the right investor. You can also rely on loans for entrepreneurs or government financing programs to achieve your purpose.

Take note…