Startups need to hire staffs, rent office, purchase equipment and what not. More importantly, they need to grow. And for adhering to all of these mentioned points, they require capital. Where to bring in such amount of capital from? Well seed funding serves to be the best option at the initial stage of the start-up to raise its required capital. Here, I list down some of the essentials that are needed for raising seed funding.
Create some market presence
One of the most fundamentals of all prospects that the investors look into a budding start-up is its ability to capture a market. Any investor investing in your firm would definitely look into how definite and quick are their chances of assembling the returns out of their investment. For a business to monetize, its business model should have the dexterity to spread its roots and branches far and wide. Its outreach to the customers and clients should be beyond imaginable limits. Proper structuring and planning of your idea can help you capture a big market, thereby helping you in raising seed funding from potential investors.
The Idea is the key
Do you think you are the next Amazon with this idea in mind? :p If yes, then help yourself.
Your idea has a significant role in raising seed funding. Investors love to invest in ideas that are not just a mere copy paste but those, that are innovative and so-called one of its kinds. Innovative ideas acts like a nectar to attract and pull an entire swarm of investors for investment in your start-up. But the ideas should be coupled with an appropriate business model and an easily scalable revenue generation system. Your ideas should focus on one or more problems that the society is facing at large and with the help of your business model, you should be capable of eradicating the prevalent crisis from the society. That’s when your idea will strike the hammer at the correct nerve of the investor and will drive them to invest into your business. Ideas that merely concentrate on money-making will pass unobserved.
Your team defines your startup!
Your start-up should have an out-standing rock star team with a CEO who has the knowledge of every slightest detail about the market that your business is looking to capture. A perfect idea along with a perfect team forms a perfect recipe for raising seed funding from investors.
Meetings, meetings & meetings
Rounding up some angels for a seed round is pretty simple. Reach out to places where, industry conferences, angel gatherings and networking events take place. Try to interact with the angel investors there and if not them, then try to familiarize yourselves with people who have such contacts. Try out with an elevator pitch keeping it as short as possible, meanwhile trying to set up intro meetings. Intro meetings are basically informal discussion forum, where you pitch the company over lunch or dinner and expand the network of potential investors through referrals. During this meet, keep yourselves well prepared with some of the most relevant questions, which may turn the cards to your favor. At the end of such deals, get at the clear understanding of the picture as of where are they standing on the opportunity of your deal. Try to bring out the amount they would be interested in to invest. This might not help in raising the seed funding in the very first go, but it is essential that you track their view point, as what are they looking for that is amiss. Incorporate that before you reach out to the investors in future, so that you chances for raising seed funding receives a hike. Keep a list of people you meet with along with the referrals that they provide you. Also keep a track of their level of interest in the seed round.
Do not lie!
Do not cook stories and deviate from the truth. Pretence to know something that you don’t know will become your own suicide bomber. Do not neglect your weak points trying to make something certain which in actuality is not. Every investor knows that there ought to be some fallacies, some risks in every business plan. Accept them but keep yourselves well prepared with a smart answer to face the questions. Make a wide portrayal of how you are looking up to deal with such problems, avoiding major risks to keep up their confidence in you. Always be frank and to the point about your negative concerns.
Also Read: How to retain the right talent in your startup?
Get the X-factor – Passion
Passion or charisma is an X-factor that possibly separates you from others. If you are an entrepreneur and moving ahead with a start-up, to bring about a change, you might have possibly sacrificed your job, your meal and even your house to give it a go. This has all come true because of your passion and confidence and so never let it die. Prepare and deliver your every pitch with the same energy and enthusiasm as it were your first one. Listen to some music or think about the greatest shits you could do, before you enter a meeting. Focus on the positive and keep immense confidence. Bring in extreme positivity within the investor about you. You never know, which pitching could be possibly your last one (i.e. the panel of investors across the table writes you a check).
Make mentors and advisers your best friend
Seek to convert couple of these potential angels into advisers which can help you to turn the tide in an angel round. Again, you can pick up a person (a co-founder, a mentor or an adviser) as your thought partner, in the management of the process of raising seed funding. A lot of activities await you in the path of getting your first term sheet. Nailing your messaging, keeping the momentum going and managing the big personalities takes a lot of preparation, hard work, credibility and hustle and this becomes easier with an accomplice, who helps you think through the issue and the craziness that inevitably goes down as you get to the closing.
“Urgency” is a necessity for raising seed funding
Investors are frivolous creatures motivated majorly by greed and fear. They may turn up a 3 week process into 6 months. Remember that in this case, time is your enemy. The longer the process of raising fund drags out, the more it seems that nobody is actually interested in your deal and the chances of raising seed funding becomes lesser. And also with this, you will be turning more of your concentration on the process rather than the company. So it becomes very essential for you to monitor that every communication that you have with potential investors makes a sense of urgency and momentum in the process. Keep your update conversations short and to the point. Make “Urgency”, a reality by burning your midnight lamp.
Fundraising is an integral part of any start-up, which at times becomes most aching task which the start-ups need to endure periodically. A founder’s prime goal should be to raise seed capital as fast as possible and this list of points might prove helpful to the founders to raise their first round of venture financing.
Did we miss any point which is crucial in raising seed funding for a new venture? Let us know by commenting below.
