A rough map of your thought process when looking for Funding
You may fall into one of these three groups:
- About to form your company.
- Been bootstrapping for a while and now ready to raise funds.
- Have already raised funds.
If you’re in the first or the third, you should probably get back to work. For people in the first group, this would be to continue/start your product development and plan a sustainable business around it. If you’re in the third, you’d probably have stopped reading this by now!
Getting a startup funded is by no means easy and requires one to be very determined and aggressive in pitching to investors for funding and patient in waiting for the results.
Here are some things that, although won’t guarantee funding, will make the path a little less hard. Before we move on, we assume here that you have been bootstrapping for a while and have a firm belief that your business will be a profitable one and needs investments to take it to the next level. Here’s a quick first lesson: Investors can smell uncertainty from a mile away, you’ve got to be sure about it before you start meeting investors. So when you’ve decided to go for funding, make sure you know what you’re doing & why.
Pitch perfect pitch! You need to tell a story, not read out numbers. People buy why you do it and not what you do. It’s a good thing to have your pitch reviewed by a few people before you actually present in front of investors. The inputs might help in making your pitch air-tight and sound more convincing. They need to believe that the product will solve a real problem(or even break the internet, like Snapchat!)and your company is the one to do it.
Numbers matter to investors only when they’re real and not when you make projections for a business that hasn’t even scaled yet. For example, investors are more likely to take an interest in the fact that your product has 10,000 active users and an active social following. Showing them charts of revenue increasing year on year is not going to have the same effect.
Be realistic about how much you need. If this is going to be the first time that you’re going for funding, be careful when you set the target. Work closely with your co-founder(s) or even other members of your team to understand the resources that the company will need in order to scale operations and improve/rebuild the product.
In addition to this, if you raise a lot more than you need, you’d be expected to show more returns. If this is something that won’t work for your startup, you might find yourself in a fix. Once investors get on board, they’re going to have a say in the things your company will do. Get used to being democratic(if you aren’t already) and make sure that you raise only what you need. It’s very easy to get this part wrong and face problems later.
Find. Approach. Win. There are various ways of finding investors to pitch to- find them on AngelList or Crunchbase, network through your corporate or personal contacts. Approaching an investor has to be done in the most professional manner possible.
The best way is a warm referral – if your referrer tells the investor about your product and asks them if they would like to meet. If they like the idea of your product, the meeting is more likely to be fruitful and chances of getting funding are also higher.
In the midst of all this, always remember one thing – a meeting with an investor is a two-way evaluation. If they can’t fully understand and believe in the change your product or service is going to bring, then having them on board is unlikely to be a win for you, even if they do invest big. Try to schedule meetings with investors on the same day. A brilliant way to create ‘time pressure’ and show them that you mean business.
If an investor is unbelievably late for the meeting(like an hour late) without warning, cancel the meeting and wait for them to get back. After all, you’ve spent countless weeks perfecting your pitch and built a company from the ground up and are now waiting in the wings! Meeting with such complacent people is simply not worth your time, no matter the amount of money they have in the bank.
Pravir Ramasundaram is our in-house content writer here at ContractIQ. Keep coming back to read more of his articles on mobility & outsourcing.