Funding Charcha

Preparing For a Successful Funding Round

Almost all the startups need funding for running their businesses smoothly. Especially when you’re running a product based company. Getting a fund can be a long-term benefit for you and you may have to do it more than once. But doing so requires immense weight in your proposal and vision to make investors interested in your business.
The most important benefit of funding is to get all resources for business such as office expansions, new hires, buying machines, and software etc. But all these things can be quite messy if you don’t have the idea of ‘HOW TO DO IT.’ As reported, 45% of the SMEs applied for third-party financial support in 2020. Click Here.
This article unties the threads of funding and gives you an overall understanding of the exact How. Read the blog till the end and you will get a draft ready for your proposal.

1. Assessing Your Funding Needs:

The first step is to assess your funding needs. Sit with your founding team and discuss what you need. All you need is 1-3 weeks to understand how your business can grow and what resources you need. Find out the exact amount that would buy all the resources like office space, machines, and employees.
Go in depth and plan how you will use the funding. With a clear vision and business goal, develop a clear plan of action with each milestone.
Here are some examples of businesses who succeeded because of a solid funding and execution plan.

2. Building a Solid Business Plan:

The second step is to create a business plan, solid enough to make investors interested in your proposal. Want to learn how to do it? Here is a simple guide to follow and write a business plan:

   Write an executive summary of the business.

          Describe your company.

          Write your business goals.

          Describe your products & services.

          Include market research and competition research.

          Outline your marketing plan.

          Analyse your business financial status.

          Show future financial projections and forecasts.

3. Identifying Potential Investors:

The far most important step is to identify the right investors to your business. Not everyone will be your partner as they will ensure their benefits as well. Here is a simple guide to identify the potential investors for your business.
There are different types of investors for different stages of your business.
  • Crowdfunding: Relatively new but popular way of raising funds from common public as a donation or debt or equity who is interested in your products & services.
  • Friends & Family: Very common for startups and a good resource of finances in the early stages of business.
  • Angel Investors: Saviour of your business with simple profit deals.
  • Venture Capitalists: Venture capital firms who are very selective in funding.
  • Business Incubator: A program which is designed to offer support to businesses with amenities.
  •  Network: Getting investment through your professional network.
  •  Private Investors: Getting investment from a known wealthy individual.
  • Events: Participate in investment events and look for better opportunities

A Note to Find the Right Investor:

  1. Check their investment portfolio. 
  2. Consider their method of investment for your deal. 
  3. Understand how much they would involve with your business. 
  4. Check what value they are offering to your entrepreneurial journey.

4. Preparing Your Pitch and Documents:

Your investors are not going to listen to your offer for more than 3 minutes. With the rising trend of entrepreneurship, you may have even less.
In such a scenario, pitch is your magic wand to spell a charm on investors. Work on it. But how?
Here is a guide:
  • Give an elevator pitch. 
  • Tell your story. 
  • Present your market research. 
  • Demonstrate your product. 
  • Explain the revenue and business model. 
  • Explain your business model. 
  • Justify your funding needs. 
  • Illustrate exit plans.

5. Negotiating Terms and Closing the Deal:

Now, you are on the final stage and all you need to do is to show your business potential and how you can help them achieve their financial goals. Also, show them the value your venture can add to their portfolio.

But there’s one factor that can improve your overall closing. An impactful story and your vision. But here are some points to care for: 

  • Don’t fake your story. 
  • Don’t be overconfident. 
  • Show benefits to investor’s interest. 
  • Prepare a final message to investors. 
  • Set how you will report to your investors. 
  • Show them an exit plan.

Conclusion:

In this article, we have discussed how simply and step-by-step you can draft your funding plan. Now all you need to do is to follow the steps and make your personal draft for business needs.

Most importantly, set a fixed amount of investment and solidify how you’re going to utilise that. Create a presentation with all major details of the project and ensure that it’s engaging and simplifies the whole model & potential of your business.

Continue Reading

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Decoding Startup Funding in 2024: Your Guide to the Indian Ecosystem

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