How To Get Funding For US Startups From International Investors

Getting funding for US startups from international investors is an option all entrepreneurs should look into. The trend today is an increasingly interconnected world where global investors are exploring opportunities in the US.

This is the opportune time to research cross-border investment and diversify your funding sources. Particularly since the current administration is encouraging foreign investment by announcing a $20B pledge for building new data centers nationwide. This is only a single example.

In addition to capital, you could explore access to international expertise, know-how, technology, and perspectives. You’ll also open up channels for potential collaborations in the future and the prospect of entering into strategic M&As.

So, how do you get funding for US startups from international investors? How would you design a compelling pitch deck that resonates with their investment criteria? What are the key elements you should highlight to grab their attention? Read ahead and find out.

Let’s Start By Understanding Foreign Investment

Before we dive into designing the pitch, let’s understand in detail what foreign investment is. When individual investors, VCs, private equity firms, or government agencies allocate capital in another country, that’s foreign investment.

Capital allocation could be for procuring assets or investing in businesses for different purposes. For instance, earning high returns and profits, promoting economic growth in the target country, or diversifying investment portfolios. Cementing cross-border partnerships can also be a goal.

At the same time, it’s crucial to research and navigate the relevant legal and regulatory framework in both countries. Before reaching out to international investors, you’ll check with legal experts for information about any restrictions on international investment.

You’ll also explore the tax implications of fundraising in another country, security laws, and conditions pertaining to IP protection. Be aware of the risks from fluctuations in currency rates between the US and the investing country. These fluctuations can directly influence valuations and returns.

Other areas where compliance is crucial include banking requirements to address money laundering and fraud concerns. You’ll also ensure compliance with labor laws and applicable employee benefits.

Customize the Pitch According to the Audience You’re Targeting

As any seasoned entrepreneur or expert fundraising consultant advises, customization is the key to designing a convincing pitch. Before compiling crucial metrics and data, you’ll research investors and understand their selection criteria. Get behind the scenes to identify projects they’ve supported.

Ask the simple question–what are they looking for? Deliver information per their expectations, and you’ll have a higher success rate. You’ll start by checking their website for previous projects they’ve funded and/or exited.

Identify the specific sectors they prefer to invest in, such as technology, healthcare, automobiles, or travel and tourism. Next, you’ll check for the countries where they’ve backed upcoming projects. If you’re looking to partner with them to gain technical expertise, ensure their participation criteria.

Once you’ve drawn up a list of investors to approach, you’re ready to create the right pitch deck.

Keep in mind that storytelling is everything in fundraising. In this regard, for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.

Outline the Company’s Value and Why It’s Worth Supporting

Regardless of whether you’re approaching domestic or foreign investment, it’s crucial to demonstrate the value your business concept brings. Investors need to see why the idea is worth backing and if a ready market exists for the products.

Your pitch should depict the target customer base and if you’re positioned strategically to serve their needs. If there are competing products, you’ll explain your brand’s USP and what sets it above other offerings in the market. Understand that supporting your company has to make sense to investors.

Don’t forget to explain how the investment will be structured. Are you offering equity, or is this debt? Are you offering preferred shares or convertible notes? What returns can investors expect, and what will the payment format be? Are you offering decision-making rights and board seats?

A robust pitch deck should also talk about the founder’s exit plan. Explain if you intend to take the company public or if you’re exploring a potential merger or acquisition deal. Investors need to see how and when they can exit their holdings and make significant profits.

Remember that a minimum viable product (MVP) is always a huge plus. It shows investors what the product can do, so consider having a demo version at the presentation for them to see and touch. A working prototype selling well in domestic markets with only the basic features is an excellent choice.

Highlight the Potential for Global Expansion

Your pitch deck should depict the company’s potential for global expansion by capturing international markets. You’ll talk about the value proposition for offshore customers, the problem you can solve, and the target market size. Also, explain the local competition and what makes your brand saleable.

Make sure you’ve done adequate market research and have the data and metrics to prove your claims. At the same time, you must demonstrate a robust domestic presence. The company should have a strong foundation on home ground before it is ready to penetrate new markets.

Here’s where a solid business plan comes in. You’ll include slides that outline the company’s assets, risks, P&L statements, balance sheets, and financials going back three years. You’ll add projections of where you see the company headed from an international perspective.

These numbers indicate detailed planning and execution. They’ll demonstrate that you have a precise estimate of the capital you need to raise and a game plan for using the funds strategically.

Offering information about existing investors adds credibility to the company. Investors are more likely to back a project and founder with strong backing. Don’t overlook the team slide. Use it to discuss the team’s experience with global ecosystems and their connections in target markets.

Highlighting the potential risks should be a crucial slide in your pitch. It will carry information about the regulatory concerns investors may have. You’ll demonstrate that you understand and are prepared to handle the challenges. Include legal and regulatory compliance issues for cross-border deals. 

Participate in Global Startup Networking Events

To get funding for US startups from international investors, networking is the first step in the right direction. Building connections and relationships is the most effective approach entrepreneurs can adopt. Always remember that investors offer capital to the face behind the company.

They invest in the people running the company if they are confident about their business acumen and expertise. Make an effort to attend meetups, international seminars and conferences, and networking events. Attending meet-and-greets is your best chance for connecting with global investors.

Also, look for events and chamber of commerce meetings where you can expand your list of global contacts. Checking professional websites like LinkedIn and Crunchbase can also help you identify the investors with whom to partner. Reach out to the people in your network and look for introductions.

Once you have a list of contacts, generate communication channels–online and offline. Your objective should be to build familiarity and trust, a time-taking exercise. Also, connect with other entrepreneurs working in the same or related verticals not just for fundraising but also for strategic partnerships.

Back on home ground, connect with incubators and accelerators who might have international contacts and connections. They might be open to introducing you to potential warm leads interested in a foreign investment opportunity.

Shop talk need not always be the key point of discussion during your conversations. But, it helps to be ready with an elevator pitch. Make sure it is concise but capable of driving the point home. Relay your enthusiasm and passion for the idea.

You’ll talk about how getting international investors onboard can be mutually beneficial. Be ready with your plans to take the company global and the value it can generate.

Sign Up for International Competitions

When working out strategies to get funding for US startups from international investors, entering competitions should be high on your list. Several global organizations have hackathons where they invite aspiring entrepreneurs to compete for capital. Several top VCs also participate in these events.

Investors aim to identify viable projects with the potential for rapid growth. Aside from capital, you can look forward to mentoring, expertise, and valuable advice for scaling your company. More importantly, you can use the events as a platform to gain exposure for your brand.

Some competitions are free to enter; others carry a nominal entry fee. The funding offered is not necessarily equity-based, so you need not worry about possible dilution. You’ll also leverage the opportunity to participate in networking events and parties and connect with potential partners.

Grab this chance to display demo versions of your product so it creates a buzz to attract investor interest. You’ll also open channels for global expansion as the company scales. Winning or getting participation credits in a competition adds credibility to your brand.

The entire experience is invaluable for an entrepreneur in more ways than one. Just make sure to check the event website for the specific sectors they promote so you have a higher chance of getting accepted.

An essential facet of fundraising is knowing how to measure investor engagement during outreach. You should know how to assess if your pitch is delivering the right impact. Not sure how to do that? Check out this video I have created.

Approach Global Angel Investors

Angel investors are high-net-worth individuals who invest in early-stage startups that demonstrate the potential to deliver rich returns. You’ll navigate their screening process and target angels particularly interested in the vertical where you operate.

Expect to offer an equity stake in exchange for funding, but you can expect mentoring and invaluable industry-specific expertise. Angels can also be individuals who have successfully built and/or exited their own high-value companies. They are well-versed in the workings of the startup ecosystem.

Partnering with angels can be an incredible opportunity, and they are typically open to backing viable startups in global locations. However, you do need to be mindful of regulatory concerns when getting cross-border funding.

It will interest you to know that Japan is the largest foreign investor in the US. It has foreign direct investments worth 15% of the holdings. Canada is the second-largest investor at 14% and Germany also features on the list of investors in the US.

Some of the top international angel investors include Hesham Zreik, Bashar Hamood, Kunal Shah, Fabrice Grinda, and Chris Adelsbach. Checking international angel investor forums is a great starting point when building a list of investors.

Approach Venture Capitalists

If your company is already generating revenues, you could consider approaching venture capitalists. VCs prefer to invest in businesses that demonstrate a robust product with high-volume sales and a great value proposition. They also look for an extensive market and customer base.

The company founder and their business acumen are high on their list of priorities. VCs can offer you substantial capital to accelerate the company’s growth. They’ll also expect a seat on the board and decision-making rights. Like angels, their guidance can propel the brand exponentially.

Be prepared to offer an equity stake in the company, which may result in dilution. However, most US regulations tend to protect companies, so you can offer terms accordingly. Also know that many foreign VCs prefer to partner with US VC firms and enter into co-investment deals.

Accordingly, consider exploring VC firms in your state and their criteria for funding startups. Mainly, you’ll focus on the specific growth stage in which they invest. Focus on building connections with them to access funding from their foreign VC partners. Navigating tax implications will also be more manageable.

Funding for US Startups from International Investors – The Takeaway!

Since the global startup ecosystem is quickly becoming more interconnected, entrepreneurs can now leverage offshore for investors. Approaching investors in any corner of the globe–on home ground or elsewhere–involves preparing a compelling pitch deck.

You’ll ensure the pitch has all the essential features that interest investors and convince them that the company is worth backing. Getting capital to scale your startup is a challenging process. The key is extensive research to understand your options and design a game plan to make it happen.

Approaching foreign investors is a great strategy as long as you’re on top of regulatory considerations. Work with professional advisors, and you will have access to the support you need.

You may find our free library of business templates interesting as well. There, you will find every template you need when building and scaling your business completely for free. See it here.