As its clear to all the entrepreneurs that cash is the lifeline of any venture. If you run out of working capital & lack access to additional funds, then for startup game is over.
You’ll agree that raising funds is a significant part of your efforts (for good or bad) &, a major challenge as the founder of a startup. Until & unless you have a clearly defined plan to follow, you’re going to end up wasting your precious time that could have been spent elsewhere.
So, it is critical to success of your startup to understand the basics of raising capital. Your are a Man or Women as entrepreneur, If you’re clear on what you need to do to get from where you are and to where you want to be, you’ll be less likely to derail while you’re in the thick of the things. Here are the steps you need to take:
Prepare yourself for road ahead
Proper planning & preparation is crucial for finding the much needed funding. This step can’t be overlooked, but unless you want to be constantly pumping your own money into your business, still you’ll want to assess and address various aspects of your company to ensure its overall readiness.
You will need to prepare financial projections and determine how much money to raise, plus decide whether to tap into debt or equity.
For example, you need to plan each head where you will spend & how much.
- # %age for Human Resource
- # %age for Marketing Activities
- # %age for IT Development
- # %age as Working Capital
- # %age for Discount & Customer acquisition
Preparation may be the most time-consuming and effort-intensive aspect of raising funds. But if you know what you want and outline the rationale behind those choices, you’lll find it easier to figure out whom to target and ask for what you need.
Remember, as you court investors, they will be asking the tough questions. So, you’ll have to be equipped with all the relevant information you need.
Make your Pitch-deck Ready
Pitch-deck is the way in which to put together an effective presentation. The fundamentals are that your presentation should be used to highlight the most attractive aspects of your business.
Generally, 10-12 slides containing information;
- About your company
- Most importantly your team,
- Competition, Target market, Milestones,
- & future plans and funding requirements is sufficient.
Armed with this information, your prospective investors should be now in position to decide on a course of action that’s in alignment with their interests.
Where to look for Angels
Among the different types of investors out there that you may consider are:
Venture capitalists, founders, family & friends, angel investors, family business offices, business incubators, investment groups and crowd-funding.
Keeping in mind that some forms of funding are costlier and riskier than others, you can also use lines of credit, bank loans. These financing options are often last resorts or backup initiatives, as they are more contingent on the condition of your personal finances and assets, versus the value or potential value of your business.
For women entrepreneurs search for female founders. They can probably guide you the steps taken by them to raise funds.
Network & find potential investors
I bet one can never know too many people. So the baseline is start networking. While networking, you don’t necessarily to be constantly promoting your business; you should make sure you are helping other people. This will help you garner a positive reputation, & when you help others get what they want, they will be more likely to help you. Trust me it works.
If you can then take Hot Desk or Virtual Office space in some fully functional CoWorkings like SpaceJam, WeWork, Starthub Nation through the help of websites like OfficePostBox. You will be able to meet many stratup founders directly as coworker. And Events in these coworkings can help you to increase your networking sphare.
Other way is to join various investment groups and resources online can prove worthwhile. But please, just don’t get sucked into the blackhole of the internet. I advise you to try making phone calls or send emails is still in fashion, remain proactive when reaching out.
While it’s always great to join communities of founders at a same stage to you, is the best & fastest way to learn how to raise capital to connect with founders who have recently closed rounds. Now you can discover founders in your area who have recently closed funding rounds. Connect to them on LinkedIn or invite a few of them out for coffee to see what communities they recommend.
Attend All Pitch Events.
Pitch competitions expose you to what investors are looking for. Observe & listen to others who sell their businesses, & do take note of what types of questions judges are putting across. Most probably these are likely the same sorts of questions you’ll be asked by investors.
Introduce yourself to the judges while Coffee breaks, who are often angel investors or venture capitalists themselves, & follow up immediately after if you think they might be interested in investing or have insight to offer. Pitching events are great resources even if you are not pitching.
Bottom line is while a polished pitch deck is important & a scalable concept is a must, the best way to ensure that you have everything you need to line up your capital is to create a network of supporters who personally want to see you succeed. This is the network that will challenge your business model, rip apart your pitch deck, ask you the hard questions and make sure that you’re investor ready.
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