In the journey of building the startup, money in the form of investment or funding is the essential criterion. At every step, there will be a need for funds for several purposes from the development of a product to reaching it to the customers. In most of the cases, there will be a necessity to raise capital from outside sources. The more difficult part is to get the investors and funds from them. This article will give detailed information regarding the measures that need to be taken before approaching the investors so that you don’t return empty-handed. Strategies and techniques for appropriate startup funding also follow.
When to approach investors.
When you have a startup idea and a strategic plan to execute it during the pre-mature stage you are in the process of building the product or the service and it is not the suitable time to approach the investors. This phase needs research on the concept and then followed by a trial-and-error method to frame a complete exact working model. After this prototyping stage, the real picture of sales and marketing comes, where you start selling your product and gaining feedback from customers. Gradually the sales increase and the market will get awareness about your service and it goes on. At this stage where you have acquired the market to a small extent, you approach investors and you can get the investment in exchange for a certain percentage of equity of your company.
Things to undertake before approaching investors
Approaching the investor for seed funding is an important stage and needs a pretty good amount of preparation. As someone will not give you a huge money without any clear vision or business idea. Here are some of the steps that you must be prepared for, to get the expertise or the investor you want to have in the journey of entrepreneurship.
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There are several programs and events where you can pitch your startup idea. During the very first time, you might face certain issues but be prepared with strong content and your market growth. During the pitch clearly articulate your vision and plans to stand out in the market. Keep a hold on the presentation and do not rush to wrap up. Investors also look for a strong executive team with diverse skill sets, so highlight your team members and explain the roles and responsibilities handled by each one of you to prove yourself a potential team.
The next point to demonstrate is the evidence for your milestone engage them with your process and journey of product development, user acquisition, financial growth, and strategic marketing. Also, provide them with the statistics and figures related to sales and the unit cost of the product. Investors focus on your long-term goals and plans to achieve them, so be prepared with your plans for scaling the business and future problems that might come along the way.
“Pitch deck” is where you attract the investors and grab their attention. It is the slides that are used during the presentation which contain all the required information about your company. Key highlighters that must be included in your slides are your product or services, why do me need this product, the market size of the sector, and the unique selling proposition (USP) of your company.
All these factors will help the investors to understand your business model. The market size is an essential aspect as it gives a clear picture of the product’s scalability and market growth. The last point and the most important factor to take care of is business valuation. Ask for the investment according to your startup stage and the way it is making the profit and do not ask for some fancy numbers. This is the point where many startups will lose investors so make the practical business valuation and crack the deal.
Conclusion
In short, for successfully raising funds you need proper preparation and a strategic approach. The practical analysis and realistic plans can help you in getting the required amount from the right investor. After attaining funds build a good and genuine relationship with the investor for the proper guidance and to establish a brand in the market. Be brave enough to handle the downfall and come up with a bang to make investment and business successful.