Today’s startups are more diverse than ever before. As a result, many budding entrepreneurs from underrepresented communities are exploring the option of launching their business venture.
The number of tech founders coming to the U.S. from abroad is on the rise. Specifically, immigrant founders are becoming more prevalent in the ecosystem.
If you’re an immigrant who’s started a company, chances are your venture raised capital from friends and family or through a community initiative. That means you likely don’t have much cash to give away.
However, fundraising from outside investors can be challenging for founders from underrepresented communities who may not have access to network and informational resources.
However, it doesn’t have to be if you know what you’re getting yourself into and how to deal with it effectively. Here are some important factors to keep in mind when raising money from investors as an immigrant entrepreneur:
The Culture Is Still New
The majority of U.S.-based tech entrepreneurs are of Asian descent. This means that for many investors, you are simply “the new Asian face of technology.” As a result, you may have to overcome a preconceived notion of Asian entrepreneurs that many investors may have.
However, no matter what, it’s important to remember that investors may have certain expectations of Asian entrepreneurs due to the high number of Asian-led startups in the ecosystem.
More importantly, as an immigrant entrepreneur, you might not be so much familiar with the language or the culture of the U.S. Investing time and efforts into getting to know the culture and the language fluency can benefit you tremendously in the future.
There are workshops or training programs by municipalities, colleges and event incubators that you can pursue to improve your skills in this respect.
This is a crucial aspect of integrating into the society and the ecosystem and investors will definitely notice and appreciate your efforts.
You Don’t Know Or Can’t Find Events Or Meetups
One key thing to keep in mind when fundraising for an immigrant entrepreneur is that investors are looking for opportunities with long-term potential. This means that when you’re fundraising, your funding conversations will often be focused on how your company’s business model will grow over the next few years.
Because you don’t have the same networks and connections as other founders, it can be especially challenging to find investors to meet in person.
If you want to meet with investors face-to-face, you can try searching for local meetup groups, networking events, or specific investors. If you have enrolled in an incubator program or use co-working space facilities, you can directly approach them and ask help – don’t be shy as they are there to help you!
However, keep in mind that some investors only want to meet with entrepreneurs in person, while others don’t mind meeting in such events, via Zoom or other online communication tools.
You Have Fewer Friends Or Relatives Who Can Fundraise For You
When it comes to fundraising for immigrant founders, one major challenge you may face is that you don’t have many connections who can help you fundraise.
This is because many investors will only connect with investment firms or companies who are established and have raised funding in the past.
For example, if you are an immigrant founder looking for investment, you may only have one or two relatives who have ties to the business and finance industries. In this situation, it would be difficult to get them to help you fundraise for your company.
How shall you fix this issue? The key is to spend more time networking in the startup ecosystem and with your potential stakeholders such as potential investors, customers and partners. This way, you can make friends and expand your professional network who might like to eventually invest in your business informally or formally.
Most startup ecosystems are fortunately open to new members including ambitious immigrant entrepreneurs. This should give you a tailwind to expand your network and meet new people.
You Need To Explain How Your Company Is Different
When it comes to fundraising for an immigrant founder, you need to explain how your company is different from other companies in your space.
This is because many investors will only invest in companies that bring something unique to the table. If your company is simply an attempt to replicate other companies in your space, it may not be a good fit for investors.
For example, a lot of foreign founders are trying to launch e-commerce companies. However, investors may be more interested in investing in companies that are trying to solve social issues, such as food safety or transportation issues, instead.
This is the case for all entrepreneurs but probably more crucial for immigrant entrepreneurs due to their “liability of newness” to the host country. So immigrant entrepreneurs need to delve into the market gap, validate the problem and their product very clearly with evidence to show prospective investors.
Keep this in mind if you are an immigrant founder: you probably need to validate firmly your business model and provide strong evidence to potential investors.
There Are Limited Investors In Your Market
Another challenge you may face as an immigrant entrepreneur when fundraising is that there are a limited number of investors who are interested in funding companies in your market.
This means that even though there are many potential investors in your target audience, you may only be able to get the attention of a small percentage of them.
For example, if you are looking for investment in Asian-run startups, there are many potential investors in your market. However, they may not be interested in funding Asian-run startups because there are so many of them already.
To fix this issue, you can broaden your investors’ network and consider different kinds of investors such as corporate investors, family offices, angels, etc. that do not specifically focus on immigrant entrepreneurs but know your market or potential customers.
Another solution is to think carefully about the scalability of your business. For most investors, scalability of a startup is the most important investment criteria so you need to assure them of this feature of your business.
Tip: Know Your Market Really Well Before You Pitch
When you’re fundraising for immigrant-led startups, it’s important to remember that you need to know your market really well. This means that you need to do your research and build a strong case for why your company is a good fit for investors.
However, this is not easy because due to limited network and experience, digging into the market might not seem easy. Immigrant founders should take their time to closely study their market, potential competitors, customers’ needs, etc. to know ins and outs of the market.
Conclusion
Fundraising is difficult for any entrepreneur, but it can be particularly challenging for immigrant founders.
Fortunately, there are a few things you can do to help make the process a little bit easier. First, research your market to find investors who are interested in your specific industry.
Second, make sure to pitch your company in the context of how it is different from other companies in your space. And lastly, make sure you know your market really well before you pitch for funding.
