No matter, if you are a startup or five-year-old organization raising funds, will always be the part of your daily life. Have you ever considered the fact that why would any type of investor want to invest in your company. Right from the initial stage of funding to the VC funding the process is not rosy at all. To put it in one melodramatic word, it's gruesome! Even a one minor glitch in your business pitch or presentation can because investors to back out, leaving your startup dry and dead.
Before you decide how much you want your investors to fund, you needs to understand, what kind of funding you require, do you wish to tap into great chemistry with an angel investor and seek angel investment, or go all guns blazing with crowd funding via companies like Kickstarter. India is changing; it's making a global presence stronger and more durable every single day. The Government of India is focusing on entrepreneurship with much brighter and concrete vision. But being said that, investors would always be cautious before writing that check because India is a cutthroat competitive market. One needs to understand more than ever now that raising funds for your business will get trickier with time, here are few golden rules to abide by while you're raising funds for your startup.
a) Ask yourself….
One of most prudent question and entrepreneur must ask himself is what kind of funding he or she requires. It is the first complication that an entrepreneur must have a concrete answer for. Each will have its own benefits and shortfalls. You can take a straight approach and get an Angel Investor to fund your startup because almost every angel was an entrepreneur at one time. Or if you feel that your project has the potential to create a strong buzz then you can get yourself crowd-funded by approaching various crowd funding websites. The famous case of Mark Zuckerberg also reminds us that you can get your project funded by your business partner cum friend as well. Similarly, you can approach your friends and family, or also go for a short-term loan.
b) What are you solving?
Apart then few mandatory things that an entrepreneur should have to make his business fundable, like the product, a stable full-time team, Growth strategy, etc. With that, entrepreneurs must and always ask themselves, what are they trying to solve by inventing a product or service. Understand what is the problem that you are trying to solve and how efficiently you are solving it. For any startup, a tangible and definite answer to this question is the key to getting the desired funding.
c) Network with established entrepreneurs...
To become a successful entrepreneur, you must first become a first-rate networker. To understand the funding process better, it's always better to seek real life examples. It's always better to speak to an entrepreneur who just got his first round of funding done by 'X' firm. He or she will help you assess the inside story of the process he or she went through. Maybe you can approach your immediate family member who successfully ventured into a business, your seniors from your college, professors, and mentors at startup events. The more you will network the more you will gain real-time knowledge and that will positively refine your approach to magnetize investments.
d) The Chatur 2 T's Approach…
This approach is now officially called CT2 approach, which means that an entrepreneur must use smart (Chatur) strategy to keep the business Transparent and Target oriented. For any business to get successfully funded one must keep in mind that you need to be very clear and transparent as water with your investors. The more you hide the more the investor will feel fearful to invest in your business. An accurate and point-by-point report of your projects of liabilities, surveys, customer satisfaction and sales reports will help an investor understand your business. You will have to earn that goodwill of your investor with a straight-arrow approach. Secondly, always be target oriented. There is no need to make 50 lines of product and cater to all of them haphazardly, rather have one niche product that you have studied and tested in and out, in other words keep higher ambition, but when you are starting lay a concrete foundation by targeting specific areas and aim to achieve them.