Businesses need money to scale and a lot of them bank upon funding from external investors to scale their business; but the fact is, only a few of them succeed in raising funds, the primary reason being the business is not ready to raise funds.
As a business owner, you should know what is the right time to raise funds and in what form you should raise funds. You might think of getting your company funded from Seed, Angels, or Venture Capitalist, but the ability to raise funds largely depends on above two factors apart from many others.
To ensure that you do not fail to raise funds, you should keep the following points in mind:
Although this point is not talked about but having advisors and mentors to the Board builds a credibility in the eyes of Investors. Additionally, the mentors can also guide you on how to approach and can really help the founders with his rich experience.
2) Market Research
For any business to be successful, you need to have customers for your service or your product. And to understand the same, you should get the research done to give numbers to your idea. This makes the investors believe that the business has a potential.
3) Financial Projections
As a founder, you know your business the best and also the potential that the business has. This should be well put and drafted for giving a clear picture to the investors to understand on what they are investing and what return can they expect. A financial projection usually gives an idea of financial planning for three to five years.
Investors will be more interested to invest in your business has a potential to grow in a long-run. If a business model is solving a problem in the short-term and there are chances of it dying in the near to future term, the investors shall be blunt enough to reject the proposal of funding and you shall fail to raise funds.
5) Bring customers on-board
This is one of the most deciding factors for investors to invest. Already having customers on board speaks about what you have already achieved rather than focussing on what you would achieve. To ensure that you do not fail to raise funds, build some credibility in the market by selling your services and products.
6) Marketing Plan
Simply having a brilliant product or a service is not enough until it is being known by the people and to be specific, the target group of people who the company sees as the potential customers. This requires a well-designed marketing plan which will make the company visible to the target customers and the narrative which will help in pulling those target customers.
7) Automation and Team
Investors prefer to invest in those companies where things can be run on automation and require less human-interference. This helps in cutting down time and cost and helps the company to maximize profit making it a more lucrative proposition for the investors.
Also, the quality of the team that you have also matters a lot when you approach investors for funding. Having a good team by your side always increases the chance of funding as the investors find it more trustworthy and appealing.
8) Clarity on funds required
Before you reach out to investors, it is very important to understand, why you want to raise funds and for what would the fund be put to use. If you are clear about the requirement of funds and how you wish to put it to use, this will build trust in the mind of the investors and they would be more willing to invest.
Investors put in their money for earning the profit. The objective behind the investment is to get return much more than what the traditional system would give. Thus, as a founder, it is important that you keep in mind and make sure that you give a good exit opportunity to the investors. In case, you are unable to give an exit opportunity to the investors, the deal would be lost.
10) Creating the Right Pitch-Deck
When approaching Investor(s), you should be able to make the things clear within the shortest possible time and this requires a superb Pitch-Deck with all the details therein. Getting an appointment with the Investors is a tedious task and once you are able to get one, you would definitely not like to miss the opportunity. And the best way to do that is to be prepared and create the Pitch-Deck with utmost sincerity not long enough to eat up huge time and not short enough to miss the crucial information.