>> Preparing yourself for the road ahead
Preparation is crucial to finding the funding you need. This step is often overlooked, but unless you want to be constantly pumping your own resources into your business, you'll want to assess and address various aspects of your company to ensure its overall readiness.
Not only will you need to examine your team’s overall health from every angle, but to research your industry, competitors and the market, define your products, prepare financial projections and determine how much money to raise, plus decide whether to tap into debt or equity.
Preparation may be the most time-consuming and effort-intensive aspect of raising funds. But if you know what you want and outline the rationale behind those choices, you'll find it easier to figure out whom to target and ask for what you need.
Remember, as you court investors, they will be asking the tough questions. So, you'll have to be equipped with all the relevant information you need.
>> Researching the different types of investors
Just because you’ve decided whom you’re going to go after and what amount to ask doesn’t necessarily mean you’re going to get what you’ve requested. When it comes to financial matters, the more options you can identify, the better. That way, you’ll always have a backup plan when you need it.
Among the different types of investors out there that you may consider are: founders, family, friends, venture capitalists, angel investors, single-family offices, business incubators, investment groups, and crowdfunding pledgers.
>> Prove you are market ready
When you’re at the stage to start pitching to VC, you should be established in some way. You could have major name recognition, or your company could have a huge social media presence; your prototype should be working and showing signs of traction.
You should prove that there is a market for your product. Scan your business model and associated numbers through a calculator, and make sure that you can defend your model when you (inevitably) get asked for it. The more risk that a potential investor can see in your company, the less they’ll want to invest in it.
>> Create your quick pitch
Even if you do get a warm intro, people aren’t going to spend a lot of time reading your pitch. Busy professionals don’t even have time to answer their emails every day. So, if they’re going to take the time to send an email on your behalf, they need a pitch they can literally cut, paste, send.
Create something that’s succinct, powerful, and easy to forward. No one has time to create your pitch for you, help you understand your value prop, or review your deck.
Your job is to make it as easy as possible for someone to do you a favor and share your pitch.
>> Understand the process
Fundraising is usually not a quick process. It usually takes a few months, maybe even longer. You’ll be dedicating a lot of time to it, and that’s going to take time away from running your business. You have to set up meetings, go to them, follow up afterwards—it’s like having a second job on top of the difficult one you already have.
But it gets easier. After you’ve successfully fundraised once, you have a good idea of what the process entails. Each time, you become a little more educated and aware of what’s required to succeed.
>> Through the experts
If you don’t have industry mentors, you should consider connecting with a few before you start shopping around for investors. Your mentors see you through significant parts of your journey; they get to know your company, and you as a founder, and also have the experience to offer their guidance to help you navigate the industry.
They could be successful entrepreneurs themselves, or investment experts, or leading influencers in your field. Likely, they will help you to understand what investors are looking for, or even introduce you to some who could be potentially compatible with your vision.