7 ways to position your startup for funding
By: Sarath Cp
Tags: Investors, Venture Capital, Startup, Funding, Founders

While setting up the company for seeking investment in the marketplace, positioning the startup plays an important role. Raising money for the startup is an ongoing first concern for the business owners. However, this is not an easy task to do. If it were more accessible for the business owners, everyone would have done it earlier. But the truth is not hidden from all of us.

Photo by Nikita Vantorin

Some business owners simply don’t dive deep into getting their bucks in a row to secure the proper financing system. That’s why several firms end up bootstrapping their operations and finding the solutions to ensure a good position in the business world.

Sometimes, startups miss out on investment capital, whether they were attracting angel investors, friends, family members, or venture capitalists. It happens because of not positioning the firm so well.

Though placing the company for the investment seeking point takes legwork, and time, when it is done well, it can set you up for success. Are you looking for ways to deal with this issue? Work on these seven tactics before you send out your first email.

Comprehend What Investors Require

The first and foremost tactic that startups should look for before seeking out the investors is understanding investor requirements. Generally, investors look for the following most wanted factors:

What is the idea behind the business?

Is the idea capable of generating good revenue?

Who is owning the business?

Does he have any track record of operating a successful business?

How will I get the money back on time?

Does the business have a great team to back up their plan?

What is he getting from the investment-equity or money back?

Approximately half of the concepts fail to earn funding. This happens because they don’t have a good idea and an excellent track record. Though they are operating the business with a great team, there isn’t a clear indication that the return will be generated.

Product and Execution Plan

The next tactic that should be used to position your startup for funding is to start planning for your products and how it should be executed. As per the saying, ‘’ vision without action is daydream and action without vision is just a nightmare’’. Before performing any plan for your startup, make sure that it is full-proved.

When the startups have an excellent product with the right business model and the team, it will be the fundamental building block for startup success. Product to Execution is like the tires to a car: one needs the other to get to your destination.

That’s why it is always advisable to identify all the company’s product/execution position before the setting of the course to attract the path towards growing and funding. This could help both startups to improve their chances of funding, as well as and investors to assess a startup for investment.

Use your Network

To position the startup for funding, some business firms also look for their known networks. Seeking funding is all about finding the right people to commence your business operations. Therefore, you really do want to invest in growing your business and start tapping into your network. Several investment companies ask for referrals from their copartners.

So, you don’t know which network can vote for your business. It would be good for your business to start talking to the people and discuss your business idea and goals. It wouldn’t matter whether you know the guy at the top-most level or not; you need to know someone who can get your foot in the door with the investors you’re interested in.

Find a Mentor

Another connected way that can help the startups to gauge good investors for their operations is finding out an excellent mentor. It does not matter what growth stage your company is in; there is always someone outside the box who knows more than you do.

You only need to find a successful mentor who can help you determine the right stage or the strategy to follow. A mentor always helps in positioning your startup and dealing with financial issues.

Therefore, you need someone else’s brain to pick — someone who knows “where the puck is going to be.” Start researching about the person who is an expert in your industry, and build a company from the ground up. Before you even think about pitching your company to an investor, pitch it to a mentor.

Stay Prepared

Before sending an email or setting up a business meeting with potential investors, it is better to stay prepared with your pitch. You have to ensure that you are summing up all the business ideas in a minute or less than that. You have to clear your point within one minute while you have got the attention of the investors. To be honest, your pitch is almost like a headline in a newspaper.

The more precise and to the point, it should be, the more investors will get impressed. Always ensure that you are meeting with the terms of the investors while achieving your business goals. As a matter of fact, investors usually have a great number of negotiating terms.

But when you have a set of ideas about what you’d like to get and how much of the company you want to give up gives everyone a starting point for negotiations. Therefore, always be prepared about your investor terms and learn the art of negotiating and letting that person know why you’re different.

Be Honest and Flexible

Don’t even try to hide the difficult stuff from the investors and managing directors. Show them a sense of honesty and flexibility and let them know that your business is based on morals, values, and realistic goals. If investing in your company, it may lead to certain risks and be honest with them. Believe it; the investing relationship is all about trust and faith. So, if investors don’t think they can trust you, they won’t invest in your company.

Always remember that when you bring investors aboard, it means that new energy and ideas are coming in the company. You have to be prepared with your plans as investors can offer different ideas and ways of doing business. Look at it as an opportunity to learn and grow.

Think of your Worst-Case Financial Scenario

And last but not least, the next way to position your company for seeking out funding is to be prepared for how you will attack when the investors don’t find your company worth it. The main idea for securing money is to raise everything in one go. This means that you have to be realistic with the projections.

Figure out, what is your worst-case financial scenario? Many startups don’t realize how expensive it can be to the users, funding working capital, and developing marketing plans. Typically, things take twice as long and cost twice as much as planned.

Conclusion

By now, you would have a better idea about how the startups can increase their position in the marketplace and seek out the fundraising options. Your best strategy would be the information, numbers, and knowledge you will gain after uncovering a unique area or high demand niche you can eventually fill.

This could help you get a better idea, as well as good investors who will help you reach bigger goals of your business. Without sufficient knowledge and research work, it would become cumbersome for the business firms to seek out potential funders who are willing to spend in your company.

Gain Access to Expert View — Subscribe to DDI Intel