Do’s and Don’ts In Start-Up Fundraising – Part I
Drafting funding strategies and implementing well thought out plans is something that requires detailed planning and effort from start-up owners. To keep your business running you require funding and require investment fast. So keeping that in mind there are always some things you must do to secure funding and some things you must avoid to make sure you can keep going back to the investors. Read on ahead to understand the dos and don’ts in start-up fundraising.
1. Know your stage
It’s important to judge on a realistic basis what stage your start-up is on. How you seek funding and the strategies you implement will depend greatly on this factor. If you are still in the ideation phase and are trying to figure out ways to implement this strategy on a business level, you should use your own money. If you’ve started the business end of things and are selling your product or service you are bound to get feedback from the same. Use that feedback to determine whether angel investors are needed in this stage. If you’re a growing start-up that is on an incline you will definitely require a lot more funding that will be used as fuel to charge and run the start-up. In that case, you will require more serious angel investors and venture capitalists who can, not only help with funding but also provide advice with their expert expertise.
2. Research is everything
Before contacting angel investors it’s important to research them in advance. Understand the niche that they serve. If that niche does not coincide with yours it would not make sense to approach them. Look for those angel investors who can provide not just their money but their time and expertise to the company. Compatibility is everything since you will be working with these angel investors for years. So make sure you gel with them.
3. Demonstrate that your start-up is indeed investable
If an angel investor or a venture capitalist has agreed to meet with you and hear your pitch, do not assume that you’ve secured funding. Make sure that your pitch deck is clear and precise. When you walk into the meeting with these investors make sure you know your start-up front and back. No question should surprise you because that’s how much research and studying up you should have done. Numbers are everything so make sure you have numbers related to your start-up on hand.
To Sum Up
The don’ts in start-up fundraising is something I will cover in my next blog. Be sure to keep yourself updated on the website!
About Devansh Lakhani
Director of Lakhani Financial Services and a Chartered Accountant helps in start-ups funding India from his network of investors. He guides and advises start-ups to scale up by providing efficient sales, marketing, team building, and business management strategies. Being a business plan consultant he has executed fundraising by block deals on the stock exchange and conducted IPOs and right issues on the SME platform to the tune of over Rs. 50 Crore. He is currently working with start-ups from various sectors to help them channelize their business models and investments.
Check out a blog about Lakhani Financial Services written by Karo Startup here.