Fundraisers are warzones. With new startups popping up every week, each having great potential, it is a humongous task to stand-out and get the investors to notice your startup. There is a lot to learn about fundraising which you can acquire only through practical knowledge. You, s an entrepreneur have to actually get out there and do it. There is barely any legitimate and useful guidance available publicly. Any knowledge that is available at all is passed around through private meetings and closed networks.
Unless your startup has miraculously received an abnormal amount of publicity already which helped to catch the investors’ eyes, fundraising is going to be a tough task. It’s filled with painful rejections: Rejections that are quickly and rudely delivered; rejections that are disguised as “let’s keep in touch”;rejections that come after a series of promising meetings. Such rejections are bound to weigh you down and discourage you. The stress and anxiety will be off the charts and you will feel like quitting.
But quitting is for cowards. Be prepared to fight through it all.
This article aims at providing you a few tips on how to get your startup fundraiser ready so that you are better prepared for the game of fundraising.
1. Cash flows : Understand costs and revenues well deeply
Cash flow is the money that flows in and out of your business in a month. Cash is coming in from customers or clients who are buying your products or availing your services. Cash is goes out of your startup in the form of rent or a mortgage, loan payments, taxes and raw materials. Lack of cash is one of the biggest reasons small businesses fail. Inadequate cash reserves are a top reason startups don’t succeed. Running out of money can shut your startup down faster than anything else. When you are starting a business understanding the cash flow is detrimental to your startup’s future. Before you can approach an investor personally or in a fundraising event, it is of utmost important that your startup is stabilised and has made some progress. This helps the investor see potential in you and trust you. Additionally, having an acute understanding of your startup’s overall expenses is important too. Create a revenue model to keep a track of cash inflows, outflows, and backups. A revenue model will help you generate a higher than average return on investment. In meetings with investors, the revenue model will help in mid and long-term projections of a company’s profit potential and operation and help the investor understand the future prospects of your startup.
2. Clarity : Having a clear solution, business concept and value proposition.
In the world of startups, complicated, shifty strategies are not appreciated. When you approach an investor with a business strategy with your revenue model, one thing he will look for in your plans is clarity. A key component of your business plan is your business concept and value proposition, which is the clear articulation of why customers should choose your solution over that of your competitors. The business concept includes your vision of the startup, talking about the value your product or service will bring to the customer, why you are especially qualified to offer it, as well describing your offering’s uniqueness and growth potential within your industry. Keep in mind that everything in your business plan must relate back to the value and benefits your product or service provides to your target customers. Having a clear cut business concept also helps you understand the market scenario. Your value proposition is what makes customers choose you over your competitors. It comprises marketing operations,strategy and how you handle your monetisation; your value proposition is the foundation of your competitive edge. Make sure that you know what you are talking about. Ensure that you have a good understanding of how your startup is functioning and what you plan to do with it in the future. Unless you yourself understand it properly, you cannot convince an investor, because your words will lack conviction. Prepare beforehand by keeping an acute eye on the work process and working closely with your team.
3. Teamwork: Highlight and project a strong, passionate team
A startup requires a team effort. When you initiate a startup, many talented minds, working in harmony are needed to be successful. Hiring a brilliant team is pivotal to your startup’s success. The quality of your team will have a direct implication on your company’s product quality and branding. The people you choose to work with have the ability to make or break your business. Make sure you have a strong startup team. You team can share the fundraising workload by developing appropriate resources and locating investors and fundraising events, by emailing everyone for fundraising suggestions, maintaining email contact and creating support packs and helping your startup enter private networks. They can also help in your startup getting enough exposure in various fundraising campaigns. This will help your startup achieve stability and progress and help you create a good image of your startup in the market. Your team’s collective effort can definitely help you approach good investors. Your investors will have a greater faith in you if they see potential in your team.