You want to take your start-up to the next level? You will probably need more funding to implement your growth plans. You might consider seeking external funding from angel investors, venture capitalists, and other financial institutions. These investors receive hundreds of deals and your start-up needs to stand out from a huge bunch of start-ups. These investors are willing to invest their money as long as they are assured of return on their investment.
You therefore need to convince these investors that your business will give them return on their investment. Your proposal needs to stand out from the many start-ups presenting deals to these investors. This short course outlines the steps to follow in order to attract investors.
Investors receive hundreds of business proposals pursuing funding. Therefore, they might turn down many proposals and if yours is among the rejected ones, it doesn`t mean that your business is not viable. Investors fund start-ups based on their industries of interests and your business may not be in their preference industries. You therefore need to be resilient and keep perfecting your business model and looking for the right investors. Seek professional help from financial experts, legal experts and others who might help you perfect your business model.
HAVE YOUR FINANCIALS IN PLACE
When pitching your start-up to investors, you need to disclose your current financial status. The investors want to see your income statements and balance sheets in order to understand the financial situation of your business. They also want to see clear financial projections that explain where your business will be over time, say five years from now.
If your business is not yet profitable, provide a clear revenue model that clearly explains how your business is going to generate revenue. Provide realistic and achievable revenue goals for your business.
To come up with these financial details, you might need to bring on board financial experts and accountants who can help you create a business model that can withstand thorough vetting.
BRING MENTORS ON BOARD
Look for people with the business experience and the business know how who can give you quality advice. Most of these people are willing to help and they can act as your advisory board. These mentors may also have experience in matters finance, go to market strategy, legal matters, and other skills that might come in handy in making your start-up investor ready. They might also have networks that might help you. These networks include venture capitals, angel investors, legal experts, and people with expertise in your business field.
HAVE A SOLID BUSINESS PLAN AND MODEL IN PLACE
Have a plan in writing that explains how you are going to implement your business strategy including your revenue model, financial projections, marketing strategy, and other long term goals. This plan should reflect your company vision and a clear plan on how to achieve it. This will give your prospective investors a clear understanding on the market need you are addressing and your competitive advantage.
A COMPETENT TEAM IN PLACE
A great business strategy needs a great team to implement it. You need to assure your potential investors that you have the skills needed and the capability to achieve your company vision. This team should have complementary skills including financial skills, marketing, and business strategy. If you are working as a solo founder, look out for people with skills that complement yours.
Having a great team assures your potential investors of your business` chances of survival in case the CEO or the founder exists the stage due to unforeseen circumstances. Many investors want to invest in people and talents. Having a talented team in place will give them the confidence to invest in your start-up.
You need to understand your target market and their needs. Through effective design thinking process, you will be able to clearly understand the market needs and create a business/product that addresses those needs. Investors want to see a well-defined market need a clear plan to address that need. You need to show them that your business has what it takes to meet your defined market need.
There are many businesses out there offering the same product and addressing the same customer needs as your business. Your business therefore needs to stand out from the competition. Investors need to see something unique in your business that makes you stand out from the competition. You need to keep an eye on your competition and look out for a gap they are not addressing. That gap could be your unique selling point.
UNDERSTANDING WHAT YOU ARE LOOKING FOR
Before putting figures in your investor proposal or your pitch deck, you need to access your business needs to understand the amount of money you need from the investor. Don`t ask for too much or too little. Have a clear plan of how much money you require and how you are going to use it. Also clearly state what return will the investor get from his investment.
BRING THE RIGHT INVESTORS ON BOARD
There is more that an investor can offer than just money. An investor might have relevant networks that might help you. The investor might possess industry expertise that might be useful in your business. It is therefore important to look for an investor who has what your business really needs to scale. Don`t just take any deal that comes your way without research to understand what the investor has to offer apart from the money.
Putting your business in a position to attract external funding requires effort and strategy. You need to build a strong network of business experts who might refer you to relevant investors and help you position your business to attract funding.