You may have finally decided to quit your job and enter business. Launching a new startup involves taking into consideration numerous essential aspects. Fundraising 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 a 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 a lot of takers. However, you might lack the finance required to launch this concept on the market. Your hard-earned savings might not be sufficient to meet your startup and family needs. Hence, you have to look for alternative ways to locate funds. External capital will be crucial to financing and developing your business from scratch.
Know the problems faced
Raising funds from potential investors is not an easy task. The 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 to avoid hassles in your capital raising journey. You may seek help from industry experts who can guide you in making appropriate decisions.
Five fundraising tips to follow
1. Practice pitching while Fundraising:
Most founders tend to overestimate their storytelling and design skills. Simultaneously, they underestimate the need to practice pitch deck. You need to make that first impression on your targeted investors. Your pitch deck can help create this first impression. Another founder 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 enough to consider investing in your new business. A compelling story will provide your investors with sufficient information, including a return on investment.
2. Avoid diving unprepared:
Evaluate thoroughly before you start. Know the reasons for seeking investment. Prepare a list of ways your startup can benefit from potential investors. The reasons you cite should satisfy your investor, who will want to know where their money is being invested. They expect a solid answer to all their queries. Research these topics and find out where you will use the raised funds effectively.
3. Negotiate with confidence on Fundraising:
Know precisely where you desire to spend the money raised from 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 be compelled to do things that are 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 the 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 sidelining your concept will mean a loss of profits. This will enable you to derive better deal terms and make quick decisions.
5. Be serious in your efforts while Fundraising:
Most new entrepreneurs tend to fail to secure funds from external sources. The reason is improper planning, the wrong approach, not being serious, and being unable to convince others about the return on investment. You have to develop the mentality to take a strong approach and secure investment for your startup. Your seriousness should be reflected in your words, which will convince investors.
New startups should be proactive in securing fundraising from different sources to stay afloat and achieve success.
