Capital is an important ingredient for a budding entrepreneur to start up their business venture whether they are bootstrapped or getting support from their family or friends. However, if any entrepreneur doesn’t get capital support, then they need to look out for external funding. For external funding support, startup founders spend a lot of time in approaching investors, endlessly refining their business plans with the hope of procuring some capital. However, it is not as straightforward as few may think, they need to go through a long and tedious process. So, the question is how to get funding for your startup? Well, there is no definite set of steps that one can follow. In fact, it varies from time to time or maybe something works for one but not for others. But, these are the detailed methods for all the budding entrepreneurs to follow for stepping in the right direction.
#Work on the idea: Business always starts with an idea, but you need to dig deeper and identify the unique prospect, or solution that you are going to provide. Once you are done finding it, try to define the unique selling points which could be possible in a few words.
#Create a prototype: You have already defined your USP, now you need to create a prototype which you can share with potential investors. Developing a prototype doesn’t mean you need to have a product sample. You can create a flowchart or animated videos to showcase your idea.
#Test the prototype: It’s time to go outside and test the prototype. It is always better to focus on the prospective customer. Do record their experience and see whether they will or will not use the product or services that you are offering.
#Develop the functional prototype: Many of you would agree that developing a functional prototype is not an easy task. This is the most challenging task that an entrepreneur faces to raise capital. Many experts suggest not to develop a complete product instead try to develop one unique feature of your idea.
#Acquire the customers: At this point, you have to acquire your potential customers by going all out, using all the growth-hacking techniques and spread the word all around as much as you can. Even after all this, if you are not finding enough number of customers, then don’t get disheartened. Just think of the idea, evaluate it, re-define and re-start all over again.
#Work on the monetization part: Now you have the clarity of your idea and how it is attracting customers. So, start developing a business model or define the way you will generate revenue from your business idea. Look at different parameters and negotiate your way through different obstacles. Check if you still make the profit or at least breakeven. By implementing these strategies, you can procure some funds to move on to the next step.
#It’s time to scale the product: From the previous steps, you have customers and cash as well as product/service insights. So now it’s time to scale it up for wider usage. By doing this, you know how much would you require for what, where it has to be spent, and what would be the ROI on your spend. And like that a lot of factual answers to some obvious questions. By now, the ground is set for you to approach your potential investors and it is perfect time to develop your pitch.
#Develop a right pitch: So far you have done most of the work to develop the right pitch. Now, let’s segregate in a simple presentation describing the product/service USP, results of your market research, traction levels, current and potential market size and where your offerings fit in the market, and how the business model or the monetizing strategy would work for you. Another important thing is to present your team members because investors not only invest in the idea but they also see the team and their role in the organization.
#Find the right investors: Next, you need to find the right investors depending on the stage of your business, industry, and type of the fund you require. You can contact the Angel network, incubators or apply to any accelerator program or government funding program. Besides, you can approach HNIs through the social professional network such as LinkedIn, AngelList, or display your products/service demos in startup events. There are a plethora of options available which you can use to promote your product to grab the attention of potential investors.
#Share the pitch for review: You have shortlisted the targeted investors and shared your pitch deck with them for review. Once the screening process is done and the investor sees the value in your idea or product, then they would call you for further evaluation.
When you are finally called for pitching session, try to showcase your sharpness, thoroughness, diligence, and intelligence. Prove it to them that you are someone they could trust. They don’t expect you to know everything but be prepared to answer any kind question. You have only one purpose and that is to impress your potential investors. But this is not so easy, you should also prepare yourself to face rejections and you might have to do this several times until investors decide to invest in your firm.
#Improve your product: Another thing that you need to understand while undergoing the process of finding investments is that you have to constantly refine the product, adjust it to the changing internal or external variables. By doing so, you increase chances to attract investment. Investors never want to fund, when their money is being used for development or marketing. Instead, they prefer to fund in a venture at the stage of scaling. In refining your product you could also be hitting the box of innovation which keeps you in sync with the latest market trends.
#Second-half comeback: As an entrepreneur, you may get rejected multiple times but don’t lose your hope. Dust it off and start all over again. Treat every rejection as a learning lesson. You are not alone as there are many entrepreneurs who have faced rejection, but they are now running their business successfully.