Having trouble getting your startup funded? Follow these 7 easy steps and see for yourself how every investor will want to work with you!
If only there was a magic formula that would get your business started right away! Unfortunately, there is no such thing and if you are thinking about opening your own startup, you are in for one long, sometimes tiring process!
They say that good things come to those who wait. Actually, good things come to those who work day-to-night and bring their passion into everything they are do. Then again, isn’t this the beauty of this whole journey? As overwhelming as the road might feel, there is no greater accomplishment, than knowing that you have managed to complete it.
Now, even if we are unable to give you that drop of magic, we can provide you with some advice on how to find funding for your startup. There are so many options of doing it that for an inexperienced person, it may seem both confusing and overwhelming.
#1 Make A Business Plan
Some say that a business plan will automatically get you the funds you need to start your company. The reality is that you will need it to explain the investors how your business is going to run according to the market, the financial metrics and an eventual product launch date. Make sure you have it with you all the time to be able to explain it to your investors in a clear and efficient manner.
#2 Do The Math
Try to think about how much money you are going to need to get your business going. It’s one of the first things the investors are going to do, as well. They will want to know how much money will be needed to get your business off the ground. This includes everything, from office equipment to legal fees and so on. This is the step that will clarify things for you: do you have enough money from your savings, or should you start talking with friends and family?
#3 The Money Rush
You may borrow some money from relatives or friends, or you can level up and go big! What are we talking about? Angel investors, venture capital funds, seed funding firms, commercial lenders or consulting. These may all seem hard to grasp at the first sight, but let’s see what each and every one of them means.
They are influential wealthy individuals willing to fund startups in exchange for some benefits, such as ownership equity or convertible debt. They have a wide experience in technology and you want their help for two simple reasons: apart from the fact that they will give you the money you need, they are also an amazing source of contacts and they can provide you with advice when needed.
Venture Capital Funds
These are companies that will invest money based on a risk/return ratio. Due to the fact that these investments will average several million dollars, they are harder to get by and they usually arrive quite late in the life of a startup, not to mention the tough agreement terms they bring along.
Seed Funding Firms
Commonly known as incubators, these companies have a powerful resemblance with angels in the sense that they will only invest small amounts of money in the early stages of a business. However, they are easier to reach, since we are talking about a small company, as compared to an angel investor, for instance. Incubators will also provide the necessary technical assistance and give advice on how to proceed next, as the business develops.
In our everyday language, they are called banks. They are likely to invest in small businesses, so you can give it a shot!
A less traditional way of building your business is by taking a job as a consultant in a project where you can build the product you were planning to sell in your startup. As time goes by, you will be able to gradually shift your position from a consulting company to one that is intended more towards the product. This way, your clients will be paying for the expenses related to the development of the product.
#4 Start Networking
A more traditional approach to raise funds is to search for seed accelerators online. Go on LinkedIn and start getting in touch with some of the world’s most successful professionals! Seed accelerators are those programs you want to get in! Not only that they will make financial investments, but they will also offer you mentors. Think about going for some co-working spaces! They will save you great money and you will also have the opportunity to interact with people having the same interests as you!
#5 Always Be Prepared
You will probably go through a lot of meetings where you will be asked to talk about your case. Avoid stumbling or getting flustered, otherwise you run the risk of losing valuable opportunities. What should you pay special attention to?
- The goals you have for your business.
- The people you are about to go in a meeting with.
- Always have a set of questions prepared in advance.
- Try to make a great first impression.
- Practice until you master it!
#6 The Pitching
Here is what your portfolio should contain when you are arguing your case in a meeting whose aim is to raise funds:
- Your vision
- The validation
- A short study of the market
- The problem you have identified
- Your solution – the product you have envisioned
- The revenue model
- A well-established growth marketing strategy
- Your management team
- The financial aspects
- Your competitors
- Your request for investment
Also make sure that the story you are saying is compatible with your investors. Hit refresh and update it all the time, instead of just adding some random facts!
#7 Stay Relentless
It does not mean that you have to become annoying and disturb your potential investors constantly after every meeting, but a follow-up is required. Check up on them from time to time. This way you will show them that you are serious about your project. And even if you don’t get the funding, you are free to ask them what went wrong. Learn from your mistakes!
Acquiring the funds you need for your startup is definitely not an easy thing to do. However, if you do stick to these steps, your whole experience will be much easier. You will put in a lot of effort, but you’re not on an unknown territory. So, make the best out of it, stop postponing and get started right away!