Here is a good startupstars guide for those who are pitching for investment. If you’re launching a startup, you’ve probably been thinking about where to get the initial funding for it. If you’re running a startup, you’ve probably already been through the first stage of raising money. The question is, where do you go from here? Here’s is startup guide that you should know about the next round of funding for your startup.
The big thought every startup faces is to figure out where they’ll be able to get the money for their startup
First of all, you should know what is the funding goal for your startup. Is it venture capital? Investment? Raising funds? We all know that investors prefer companies that are profitable, but you need to know what’s the reality behind the venture capital model. If you’re going to go for investment, you have to show your actual path to profitability first. If you don’t have a clear business model or you’re not profitable, you will never get funded by the venture capital firms.
Venture Capital (VC) investment in India more than doubled from its previous quarterly high of $6.7 billion in Q2 2021 to $14.4 billion during Q3 2021, according to a recent report by KPMG.
Startup Guide to Funding: Here are some of the things that venture capitalists look for before investing in a new company
Critical mass: Is there enough demand? This could be for a hardware or software product, or even for a service. Be sure to have enough demand to meet the investment thesis.
Target customer segment: Can you understand your market, and who is the ideal customer? If you are selling medical products, be sure to understand the demographic that will be your customer.
Channel of distribution: How will the customer get it? Will it be online or on TV? Will it be via doctors or sales reps?
Distribution network: You don’t want to be in a country where there are 100 million people with online access but there’s only one store that sells your product. This is where strategic partnerships will be key.
Eye-catching/unique selling proposition: How can your product help customers? How does it differentiate itself?
Market size: Get a sense of the size of the market. There are a lot of niches, but the market is more likely to grow and you’ll have better chance of growing with it.
Funding round: Your fundraising round should be a result of an investment thesis being met. Will you have enough money to meet the desired metrics?
Sales and marketing team: You don’t want to hire too many sales and marketing people at once. The key is to hire the right people. The startup should have a clear sales and marketing strategy in place, and this strategy should be communicated to investors to show the likelihood of growth.
Management team: What are the skills of the management team? Does it have experience running a company and what do they bring to the table?
Technology team: How much investment was put into the team? Is there competition in the market? Did they leverage technologies to build their product?
Estimated growth rate: Investors like to see strong growth, and if you don’t have this, then you will not have enough to justify the initial round of funding.
Scalability: Is it scalable? Are you creating something that can be done on an omni-channel basis?
What venture capitalists mean to a startup?
There are venture capitalists like Sequoia Capital, Kalaari Capital, L Catterton, and Matrix Partners who are able to bring different perspectives.
These funds offer a lot more than simply money. They could provide you with a way to focus on one market and bring down costs and learn to scale the business with them.
Choosing the best investor
The biggest mistake entrepreneurs make is to blindly seek funding from one investor when they could get great funding from several players at once.
It is better to look for several investors, and pick the best in one round of funding. Investors have a different strategy and will look for a different outcome from yours.
Syndicate investors are a great option to raise larger funds and scale your business. Usually they invest one-third of the investment in the company and the rest they can invest in other companies within your network or industry.
Relationships
Some investors have a good network and will help you with introductions and introductions to other investors in the same venture.
The reality is that every startup need funding to continue to grow its business . Everyone is aware of this but very few actually take the action necessary to continue to grow and improve their business.
If you are in this position and you know that you will need to raise a round of funding to get off the ground, it is a good idea to have a clear idea of your business plan .
Leverage your existing relationships to create a business plan that is not only enticing to investors but is also realistic .
