Self-funding a start-up can be a good option when getting started but, at some point or other, start ups will greatly benefit from venture capital or angel investors to support their efforts. In order to improve your chances of getting start-up funding, there are certain steps you can take.
Do you have a strong business plan?
In order to secure funding for your start up, you will need to be ready to present a strong business plan which lays out the potential trajectory of your company.
Investors ultimately want to know what their return on investment will be. For that reason, it is necessary to share not only the past data of your company, but any forecasting for the future - which should be as detailed as possible.
Good business plans should include information on all aspects of the business including industry trends, predicted marketing actions and their outcomes, financial forecasting, information about the personnel and if you predict any changes and operating procedures.
It is not enough to present forecasted data without stating the action plan to get there and key measurable objectives that you, and the investors, can track.
Is there demand for your product?
If there is little or no demand for your product, investors will have very little incentive to fund your project. Thus, you will need to express clearly what needs your product is meeting and your unique selling point. Especially if you are pitching a product in a saturated market, you will need to explicitly explain what makes your product different.
Do you have a working version or MVP product?
If your start up is in its initial stages, you will need to be able to present something to funders in order to demonstrate that your company is viable. This may mean presenting an MVP (minimum viable product) or working version. Pitching a product that does not yet exist, with no tangible product, makes it far more difficult to convince investors to take a chance on your project.
Has your founder had previous success?
"Being a repeat entrepreneur can have huge upsides," explains Dan Kettle, founder of short-term finance provider, Pheabs.com.
"Having already built up and sold a company can be very useful for investors since it shows a proven track record and massively reduces the overall risk. A repeat entrepreneur that has been successful is likely to have good partners and connections who they can call upon to help grow their business. It also potentially means that they have a better understanding of risk and how to run a business, compared to someone who is doing it for the first time."
What could you achieve with funding?
When seeking funding, you need to be clear about what your company would be able to achieve with these funds. No investor is going to invest in something if they do not know where their money is going. Statistics will strengthen your case, for example, if you can prove that funding could increase your market share by a certain percentage.
Copyright 2021. Article made possible by Tudor Lodge Digital.