Even the most successful and innovative businesses are faced at the beginning of their journey with a major hurdle: funding.
No matter the stage your start-up is in, understanding the financing process and having access to right tools and skills will help you and your team secure the funds you need to develop your company further.
There are a few general principles that all startups should keep in mind when raising capital. Here are some of them, based on our experience of assisting innovators and investors alike.
#1 Plan Well
When raising funds, you should not only think about how you are going to spend the money. The results you want to achieve, the road map, and the next rounds of funding are equally important when looking for capital. Start looking for financing options before running out of funds because it can take as long as six to nine months to finalize the fundraising process.
#2 Ensure your start is fundable
There are industry standards for startups at each stage of development. Investors won’t provide funding unless you meet them. Check your progress cap table, traction, and team composition before you start your fundraising process. This is very important, otherwise you will lose the most important resource you have, your time.
#3 Gear up for it
You should be fully armed before you kick off your fundraising process. Prepare all the necessary documents. Do some research on the potential investors and make up your mind on how the deal should look like.
#4 Have an exit plan
Show you know the rules of the game. Investors invest to exit. They are looking for profitable exit options in the shortest possible time. Show them an appealing and reasonable exit option to increase your chances of being financed.
#5 Build a compelling pitch
Having a good pitch is essential no matter who you talk with. Whether you need to attract new partners, convince investors or write a winning grant, you must adapt your message to convey a powerful story that speaks to both organisations and individuals. Make sure they understand how big the problem you are solving is. Create urgency and FOMO. Be clear, share your vision and keep your energy high because this will show how passionate you are about the project. Note that some doors will only open once.
Not sure how to create a successful pitch? Take a look at this article: Pitching: From research to business proposition
Need personalized support with your startup financing? Get in touch with our experts.
FAQs
- What specific funding options are available for startups?
Startups can explore options like bootstrapping, grants, angel investors, venture capital, crowdfunding, or bank loans. The right choice depends on their stage, needs, and growth potential. - What are the key components of a successful pitch?
A strong pitch clearly identifies the problem, presents a solution, demonstrates market potential, and conveys passion. Tailor the pitch to the investor’s focus, creating urgency and emphasizing ROI or impact. - What common mistakes do startups make during fundraising?
Common mistakes include starting the process too late, failing to meet industry standards, underpreparing documents, or neglecting investor priorities like exit plans. Avoid these by planning, researching, and preparing thoroughly.