7 Smart Steps for Funding Your Startup

Founding and funding a new business aren’t usually synonymous. There are a seemingly endless number of tasks to juggle in getting a startup off the ground, and capital is front and center.

Bootstrapping can only take you so far. Where will the money to grow come from?

What To Consider When Funding Your Business Finances

  • You could join a startup accelerator, or approach investors individually.
  • You could research VC tools designed to help startups improve the ways they raise venture capital and manage investor relations. A growing number of VC software tools, such as FlashFunders and Lenderkit, bring startups and investors together, enabling you to crowdfund capital from multiple investors through a single source. Some sites, such as FounderSuite, even feature investor profiles to give you a sense of the people who hold the purse strings.
  • If you prefer to crowdfund on your own, you could launch a Kickstarter campaign.
  • You might load up a high-limit credit card, or take out a personal loan.
  • You may even dream about becoming a contestant on Shark Tank.

But even those who make the Shark Tank cut, like all savvy startup founders, know that a great idea is just the beginning. You need a solid base of information to interest investors in supporting your new venture.

Here’s what you need to know to secure venture capital in order to stabilize and grow your new business:

  1. Define and Design. What is the problem your product or service will solve, and, more importantly, how is your idea distinctly different from what investors see every day of the week? Your value proposition must be unique, compelling, and viable, reflecting a deep understanding of the problem or opportunity at the macro level and providing a solution with exceptional benefits to the buyer, whether B2B or B2C.
  2. Know how much you need. Some Shark Tank hopefuls go on the show and ask for $50,000. Others want $250,000. What do you realistically require in order to take flight? Venture capitalists are not philanthropists: they seek a maximum return on their investment. They are likely to ask for a smaller stake in your company if you ask them to invest $50,000 than if you want half a million dollars.
  3. Tell the story in numbers. What are your financial projections for growth, and for profit? Can you demonstrate industry benchmarks for similar companies? What is your cost per customer acquisition? Is your financial data well researched, and can you deliver it with confidence? Investors typically spend less than four minutes reviewing a pitch deck, so make yours memorable!
  4. Tell the story in images. Some of the most successful Shark Tank pitches provide Show and Tell. And just like in grade school, the visual delivery captures the Sharks’ attention — and perhaps predisposes them to a favorable outcome. Take a look at Shower Toga and Scrub Daddy.
  5. Create a strong core team. You may be the face of your startup, but that’s seldom enough to impress a potential venture capitalist. Who are the other key players? Do you need technical experts, such as engineers or software developers? What about a CMO who can wear the marketing, PR and advertising hats?
  6. Build a consistent, data-driven online presence. Is each team member’s LinkedIn profile, Facebook, Twitter, Instagram, and other platforms on brand, up to date, and professionally written, including a business headshot? While this might seem almost too obvious to mention, you’d be surprised how often such small matters are overlooked (and the difference it can make to a prospective funding source). In a digital-first world, what a potential investor sees about your business and team online is critical. Make sure your online presence carries the professional footprint your startup wants and needs to stand out.
  7. Beta test to validate. The best way to know if your startup idea will succeed is initial results. Do you already have customers clamoring for your product or service? Do you have a reliable industry distribution partner? Early sales? This type of traction will help build your credibility with potential venture capitalists.

Okay, you’ve found your investors and you’re off to the races. But this is just the beginning. To keep this all-important relationship burning bright, you as the founder need to manage investor relations just as you do your team members. Because even though they may not be on site every day (or at all), your venture capitalist is a key member of your team.

Here’s how to manage this relationship as a startup founder:

  • Communicate. Be open, honest, and direct with your investors. They’ve invested in other startup companies; they’ll know how to handle the kind of crises that can typically arise early on. Sharing what’s happening and seeking their counsel rather than trying to hide a problem can make or break your relationship. They expect challenges; that’s part of the deal.
  • Collaborate. It’s not just about the money; VCs are your success partner. Agree on your KPIs, and share in their development as your business evolves.
  • Update. When, how, and how often will you meet to discuss progress and make strategic decisions? A monthly update call (phone or video) and quarterly board meetings are standard options, but depending on the nature of your business and the availability of your VC, you may wish to arrange more or less frequent interactions. The important point is to create an agreed-upon structure and manage expectations.

Now you’re set for success.

FG Editorial Team
The Founder's Guide Team - Asian Associates with dynamic elements out to make a change.Thank you for visiting our site! If you do have any questions or inquiry, feel free to contact us through our links and please don't forget to follow our social media accounts. It would be our pleasure to help you in any way we can. Always Remember: "Proceed to Succeed". Hoping to hear from you soon!

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