Getting your startup funded is one of the most important things you will be involved in as a founder. Here are few key tips that we have learned the hard way:
- Do it properly or don’t do it at all
The first and the main rule of fundraising -There is no such thing as just ‘trying’. Fundraising is a complex and time-consuming process and you must have a single-minded approach, otherwise why do it at all? Don’t say, ‘we’re trying to raise’, ‘we’re testing the waters’ or ‘exploring different options’. You simply HAVE to have an attitude of success. Of course, you might fail. This is a part of the startup journey. However, in the funding process your winning attitude plays a huge role.
- Remember what you are aiming for
You need to get as many investment offers as you can. Unfortunately, no one can give you a definitive step-by-step guide on how to do it. Investors have different views and what can impress one, might turn off another. So, make sure you research who you are dealing with and what information they want from you. Using modern presenting tools such as Power BI (to show some nice visuals or financial forecasts), or Prezi (if you want to bring a different approach to the ‘slide’) can really help here, it often makes the story much more appealing.
- Don’t ask for too much or too little
Instead of pitching complex financial models, focus on what you need to get your startup to the next level. If you need money to build the product, how long do you need? How long do you need to get a certain number of users? How long do you need to get to a specific revenue target? Give yourself a cushion and raise the monies for as long a period as possible. Remember every funding round will take up a huge amount of valuable management time.
However, asking for too much funding can also be a bad thing. Investors may think you are naive in the valuation of your company and will be worried that you will not be hungry to hit milestones.
- Do your homework – prepare some clear fundraising materials
The minimum you need is a short description of your business, an exec summary and a ppt pitch deck. Some investors will ask for a detailed business plan. A prototype or mockup can be really helpful, as investors would really prefer something to play with.
- Less is more – that’s what investors want
There are only a few key things most investors look for to get them excited about the deal:
– the problem you are solving
– the size of the opportunity
– the strength of the team
– the level of competition and competitive advantage that you have
– your plan of conquer the market
– your current status and future milestones
– a summary of financials, including how much you need and how you will use the money