“You need money to make money” is one of the most common cliches in the business world. The truth behind this phrase couldn’t be more true for startups, who are often strapped for cash and looking for investors to help them grow their companies. Getting funding can seem like an impossible task at times, but it doesn’t have to be! Damon Becnel will discuss eight steps that you should take when trying to generate funding for your startup.
Have a Detailed Plan
Having a plan is essential when you’re looking for funding. You need to know exactly what your startup needs money for and how much that will cost! After coming up with this budget, share it with potential investors to see the exact return on their investment.
Make Sure you can Explain why your Business or Product is Needed
Your idea might be amazing, but there has to be a reason people should invest in it. If an investor doesn’t feel like your company fills a specific void, they won’t want anything to do with it! Even if the market isn’t necessarily ready yet for whatever you aim to provide, make sure that something differentiates you from other similar companies out there. Maybe through transparency of process/product and demonstrating just how much need it is for your startup to exist.
Be Transparent about the Status of your Funding Goal
If an investor knows you’re close but not quite at your target goal yet, they will be more likely to invest to “jump on board.” Additionally, if a potential investor sees that it seems like other people are investing too – essentially validating their decision- then they will feel even better about contributing financially! Showing investors proof of progress with small cash infusions from angel investors or family members also indicates commitment from others in addition to yourself. This way, when you ask someone else for money later down the line (which inevitably happens), they’ll think twice before saying no!
Know your Market
You need to know the current market for your product/service and who’s buying it. If you can’t find any information about this, then try expanding your search to include other markets that may not seem like a good fit at first glance! You could also expand into different geographical areas or even internationally, which opens up countless opportunities. Additionally, don’t forget that there are many untraditional ways of finding customers, such as through social media campaigns and meetups with potential clients in similar industries, etc.
Be Prepared to Present your Idea in an Elevator Pitch
Investors are busy people, so they don’t have time to sit through a long presentation about your startup. Instead, you need to be able to explain what it is that you’re trying to do in just one or two sentences! This description must show how big the problem/market is and why there needs to be a solution for it – otherwise, investors will wonder why anyone would want/need this?
Make sure you have a Realistic Budget and Timeline for your Project
Never go into a meeting with an investor without doing your research and knowing how much money you need and why. If someone seems super interested in what you’re doing, be patient and try to wait for them to bring up the idea of investing before asking if they would like to contribute! Remember that people are more likely to invest when it feels like everyone else is (so make sure others do first).
Don’t forget – investors love transparency, so keep the lines of communication open between yourself and your potential backers at all times! You should always feel comfortable approaching them about anything related to their investment or just general feedback on how things are going. Having this dialogue can help create a sense of trust which makes future investments easier down the line.
Keep Costs Low by Doing Things Yourself whenever Possible
If you can create something on your own, then do it. There’s no need to hire someone else when there are plenty of free resources available online! If money is tight, try outsourcing small jobs like design work – which could lead to bigger opportunities- through websites such as Fiverr or Upwork rather than hiring employees who will require higher salaries and benefits (which means more spending for you).
Don’t give up if the first few people turn down your request for funds! Just because one person doesn’t believe in what you’re doing doesn’t mean that others won’t too. Make sure you don’t run out of time while fundraising either since investors want to see quick results along with a strong team behind them.
Find Mentors who can Help Guide you through the Process
It isn’t easy to develop a startup, and it’s even harder on your own! Look for an experienced mentor who has been through the process of fundraising before (in startups or other projects) and can help you figure out what is working/what isn’t. Perhaps someone recommended them as well, but if not, consider reaching out to those in similar industries who have some success under their belt since they might be able to recommend good mentors too!
With so many people looking for funding, it can be challenging to secure the financing you need. But if you follow these eight tips, your odds of getting a yes from an investor will increase exponentially.