How to attract international investors

Attracting international investors to your business can be a daunting task. It requires time, effort, a lot of confidence in your business, and the willingness to handle rejection. But with the right tools and preparation, you can be well on your way to breaking into a foreign market with the support of an international investor behind you.

1. Start with a strong business model

Every good business decision is built on a strong and clearly thought-out business model, which is a design for the successful operation of your business. It identifies your revenue sources, customer base, and finance details.

Your business model needs to prove that your business can be profitable in the international market by showing how successful it has been in your own country. Breaking into international markets is often riskier than the domestic market because there are several new variables to contend with, like different government regulations and the mutable nature of the markets. Thus, international investors tend to be more cautious when taking on new investments, and you’ll have to work harder to convince them that your business is worth the risk. A detailed business model that preemptively answers investors’ questions will go a long way in determining your credibility as an investment.

2. Be prepared

Before seeking international investors, you should prepare as much data, research and information as possible. You will need to know everything about your business, the market you are looking to enter, and how your business will perform in that market. Your preparation inspires investors’ confidence in you and shows that you can navigate the complicate world of foreign markets.

You should have the following on hand:

  • Significant data that shows your business’s success in your domestic market
  • Projections on how you plan to continue that success internationally with supportive data
  • Documentation of how your business will work under the concerned countries’ government regulations (e.g., if you need government approval, have the forms and a timeline ready)
  • A list of potential pitfalls and how you plan to navigate them
  • You should also be able to show what an investor could gain from partnering with your company.

“Focus on the benefits [the investors] will receive from investing in your company versus a company from their own country,” said Stacy Caprio, founder of Accelerated Growth Marketing. “If there are tax or profit advantages, let them know and be clear about it in your marketing.”

You should also educate yourself on the cultural norms of the country or countries you plan to work with, as ignorance or miscommunication can be disastrous for a business.

“Know that they may work in a different manner than you,” said Charles Floate, owner and CEO of DFY Links. “It is worth doing your research into potential partners before signing on the dotted line.”

3. Choose between vertical and horizontal foreign investment

There are two main types of foreign direct investment –horizontal and vertical. Horizontal investment is the most common and occurs when a company (investee) merges with another company (investor) that offers the same products or services from a different country to become stronger in that market. The goals are to reduce competition and to gain a piece of foreign market share.

The second type is a vertical investment, which is when an investor merges with an investee of a different country for the sole purpose of adding value to their supply chain and complementing their business. For example, your company may produce a component or strategy that the investor needs.

To decide which type is best for you and your business, consider what products or services you provide and what you are looking to gain from entering a foreign market.

4. Build an international network

If a business model is the foundation of your business, then networking is the catalyst for its growth. It is difficult for any business to get off the ground without a good network, and even more so for a business looking to go international.

An easy place to start is online. Use LinkedIn to find the industry leaders and major investors in your space, and connect with them through a shared contact or interest.

A social media presence that accurately conveys what your business does will solidify you as a legitimate investment opportunity and is one of the easiest ways to build a network. You can also attract attention by becoming an industry expert yourself, producing and sharing relevant content on your social media profiles. The key thing to remember is that you get out what you put in – so being a passive follower won’t cut it.

If your alma mater had a strong international presence, such as a branch campus in another country or a partnership with a foreign university, see if you can make connections with professors or fellow alumni, especially if they are in the market you are looking to enter.

Outside of the digital space, see if there are networking events, conferences, or symposiums near you that you can attend in person. If a list of attendees is available, go through it to see who would be most beneficial and appropriate for you to speak with rather than going up to people at random.

5. Use available resources

You should consider your network one of your most valuable resources, which is why the effort to build up a good one is so important. You can use your network to make trusted introductions to investors or investment groups as well as to provide advice and guidance when you run into complications.

There are also many online resources for small business owners looking for investors.

Though it might seem counterintuitive to look locally, you could also check out your local chamber of commerce or Small Business Development Center. They have the resources to answer many business questions, and you never know what connections you could make – some may have international connections.

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