Being an exciting and a difficult activity for the founder of a start-up but on the other hand it can also be a lengthy and exhausting process that keeps the founder away from their business in the most important time.
Investment bankers and investors receive tons of fundraising requests. So, they have multiple reasons like business issues, investor’s preference towards the industries, etc. to say “NO”. So, it’s the duty of the founder to give solid reasons to investors like they have a superb team, astonishing market, good understanding and knowledge of the business and attention seeking technology, etc. to convince them to make investment in your start-up.
Entrepreneurs should prepare themselves for lots of questions from investors like business models, size of the market, details of the team, data of competitors and distinction, and judgements and refusal from investors. Being prepared for all these questions helps the founder to save their time and it also makes them confident and well educated which helps them to gain the trust of the investors.
Golden period of entrepreneurs is gone when they used to manipulate the investors for raising the funds. In present time, power is in the hands of the investors. So, the founder should have a great team, sustainable market, and rational business model to generate revenue before approaching the investors for fundraising.
Except for having a great team and business model, entrepreneurs need to consider the following things also before raising capital to make most out of it:
- Entrepreneurs should be visionary and have pioneering and feasible business plans to attract investors.
- Founders should have complete analysis of their business competitors and advantages they have over their competitors which should reflect the investors.
- Before raising the capital, the founder should have enough corpus to incur fundraising expenses and operating expenses of at least 6 months to carry out the business.
- Entrepreneurs should spend at least around 8 weeks to prepare all the materials like teaser, investor deck, financial model, and other related materials in detail as investors are keen in looking for details of the business before making investments. The pitch deck is arguably the most important document that will help in raising funds in the life of a company.
- Entrepreneurs need to build a brand before raising capital. Founder can ensure this by answering the following questions:
- Founders should ensure that the name of their company, products, and project is not like other companies which can confuse the consumer.
- Make sure that the website name and design is different from other companies otherwise it can confuse the target customers.
- Media platforms of the company and its team should be aligned with business name, synopsis, tagline, logo, colours, etc.
- Start-ups need to ensure that at least one blog is posted every month on its website and various media platforms and participating in conferences every year, so that investors can understand what types of business you are engaged in and can partner with you for doing business.
- Founder should ensure that its team has relevant experience and a good track record that assures the investors that they can achieve the aim and goals of the company.
- Entrepreneurs should have a clear picture as to how they will invest the raised capital, why and how and why will they invest in the areas. They should have all the logic and reasons for channelizing the funds in a particular area which can give surety to the investors of their funds.
- Need to do some research to find the right kind of investors for the company. The right investor can have a huge impact on the direction of a company. Investors may have strategic, operational, and/or domain expertise and may have large relevant network of customers, partners, analysts, investors and strategic partners
If the entrepreneurs have considered all the above points and are positive towards it, then they are ready to raise capital.