Startup Funding Espresso – Use Incentives To Attract Early Investors

Use Incentives To Attract Early Investors

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Incentives can entice investors to join the round.

In the early days of the raise, you may want to offer warrants to investors to come in early.

Warrants give the investor the right to buy stock in a specified price range.

One could offer two warrants for those in a group who join this month, one warrant for those who join next month, and no warrants for those who join thereafter.

Those seriously considering an investment will consider coming in earlier to capture the incentive.

Incentives also work to break a stalemate in the fundraiser.

If you have ten or more investors who are slow to join, you can offer the warrants as an incentive so someone in the group goes first.

In this scenario, offer one warrant to each of the next three investors in a group.

Once three investors are in, other investors may follow even though there are no longer any incentives.

Discount stores that promote too many price reduction sales train their customer base to wait for the next sale.

Use incentives carefully so the investors don’t wait for incentives to invest.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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