How to fund your startup? Is there any unusual formula to receive funding? Why investors are funding in other startups? What tactics help startups in receiving funding hastily? Of course, these and many other questions knock in startups’ mind daily. But sometimes getting a correct answer for all these questions turn out to be little difficult especially for those who are just starting out on this path with a business idea which is in incubation stage. If getting startup funding was so easy, every idea would have funding, but in reality this is not happening. Well, before you reach out to investors, you need to do your homework on various ends to make sure that your business idea has a real market value and capability to survive. You need to have an innovative idea, well planned business plan, skillful founders’ team and a lot of information to clarify everything to the investors. Moreover, there is no specific formula to get funding for your startup. However the points explained below are keys to consider when you approach investors for seed funding. Let’s start with pre-home work;
No one wants to invest in a business that may not have potential. There are many things you should know before starting your startup. So before heading to investors, does your part of home work to confirm that your idea is really a great one. Start with studying about the market potential and where exactly your idea fits in. You need to make sure that there is a real market for your idea as large numbers of people are facing a similar problem and you are going to provide them an effective solution in the form of your product or service. You can also choose an apt technology or method to understand the market and potential.
Ensure that your product or service is solving a problem that huge numbers of people are facing. Investors don’t get inspired with beautiful designs and colours unless your business is not actually solving a real problem. If your idea is solving a problem about that even consumers were not aware comprises high potential to attract investors’ attention.
Apart from your friends and family how many people believe in your idea? Go out and look for people who have the same problem and believe in your idea as real problem solver. It will also help you in finding some genuine customers for your business. These customers will act as a proof in front of investors that your business idea carries potential to hit the market.
Mostly startups ignore their first customers’ feedback as they assume that their idea is more powerful. But ignoring customers’ feedback means you are giving investors a chance to dump you at first stage. Actually there is a lot to know about any product or service and customers are the best source for getting real information about them. Customers and investors can see the potential of your business idea better than you. Furthermore, by matching and comparing customers’ feedback with the data provided by other information sources, you can answer investors’ questions competently.
Investors love to invest in those ideas which have a killer combination of skillful founders or team members. They believe that failure chances are less when a business idea is grown under the supervision of capable people with right set of skills. If you already have skillful people in your startup team, it will act as winning combination. If you don’t have, please get some on board to add value.
Don’t know how to make money from your idea; how to execute your idea for profit? Well, if your business model is not powerful for money making, it is of no use. Nothing is great than presenting a precise and well planned business model in front of investors.
Other main points that you need to consider are expansion and scalability! Will you expand you idea to global market? Which country could be potential market overseas and why? Investors will love to know all about your future plans and business model which will make it a lucrative idea worldwide.
Why knowing your target market and competition is everything for a startup? It is important as it help you to understand exactly who are in your direct competition and what they are doing. Investors believe understanding competition prevents business failure as it prepares founders to lessen risks and become adaptive towards changing market. Research is the best way to know all about market competition.
There are a lot of other ways to get funding for a startup. Think wisely on what you want for your startup. Get the answer from you for what you will do with raised amount. Investors want concrete reason for why you need funding and how you will use it in your business. Taking bank loan could be a solution but before that be clear about what you will do with the loan amount and formalities to fulfill before loan passing.
Your business plan will be more impressive if you compile all your data, figures, market size etc in order. A compelling story telling to show potential of your idea will be icing on cake.
At last, seed funding helps startups to capture the attention of those investors who want to get in early in a budding startup and exit rich. They get a certain amount of stake and invest in a startup. So without wasting your time start thinking on the shared point. However, before approaching to investors make sure that you do not have greediness for getting seed funding anyhow. Moreover, it’s not necessary that startup life will become easier after rising funding!
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