You may have finally decided to quit your job and enter into business. Launching a new startup involves taking into consideration numerous essential aspects. Funding is one important element without which Startups cannot just take off. The fact is most of them tend to wind up within the first year due to lack of funds. Hence, you need to know how to raise funds to enable your new business to operate smoothly.
Securing External Capital
You may have devised a unique concept that will have lot of takers. However, you might lack the finance required to launch this concept in the market. Your hard-earned savings might not be sufficient to meet your startup and family needs. Hence, you have to look out for alternative ways to locate funds. External capital will be crucial to finance as well as develop your business from scratch.
Know the Problems Faced
Raising funds from potential investor is not an easy task. Structure of raising funds is what makes a huge difference between those who secure funds and those who cannot. You have to get it right from scratch and avoid hassles in your capital raising journey. You may seek help from the industry experts who can guide you to make appropriate decisions.
Five Fundraising Tips to Follow
1. Practice Pitching:
Most founders tend to overestimate their storytelling and design skills. Simultaneously, they underestimate the need to practice pitch deck. You need to have that first impression on your targeted investors. Your pitch deck can help create this first impression. Another founder providing introducing you to a new investor will make that first impression. What you need is a well-designed, well-structured, pitch deck that will impress your investors to consider investing in your new business. A compelling story will provide your investors with sufficient information including return on investment.
2. Avoid Diving Unprepared:
Evaluate thoroughly before you start. Know the reasons for seeking investment. Prepare a list how your startup can benefit from potential investor. The reasons you cite should satisfy your investor who will want to know where their money is being invested. They will expect a solid answer to all their queries. Research on those topics and know where you will use the raised funds effectively.
3. Negotiate with Confidence:
Know precisely where you desire to spend the money raised from the investors and how you will benefit from it. This should be done before you negotiate with your investors. Establish a clear goal. Do not allow investors to compel to do things that is against your ethics or business objectives. Create a structure for the funds raised that will enable a win-win situation for all concerned parties.
4. Expand Investor Funnel:
You have to develop your investor network. Research investors close to you and your circle. You may even ask other founders to share their fundraising experience and help you secure trustworthy investors for your business. Doing thorough research can help you locate an investor who will be interested in your ideas. Arrange warm introductions and negotiate with several of them until you find someone who best fits your needs. Prepare an approach where investors should feel that sideline your concept will mean loss of profits. It will enable you to derive better deal terms and take quick decisions.
5. Be Serious in Your Efforts:
Most new entrepreneurs tend to fail in securing funds from external sources. The reason is improper planning, wrong approach, not being serious, and unable to convince about return on investment. You have to develop the mentality to take a strong approach and secure investment for your startup. Your seriousness should reflect in your words that will convince investors.
New Startups should be proactive in securing funds from different sources to stay afloat and achieve success.
