capital raising process for startups

Valuable tips on raising capital for your startup

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There will always be ways to fund your startup. There’s always money for good ideas. The main question you should ask yourself if you are looking to raise capital for your company is not “where” but “how”.

  • How to get there well prepared?
  • How to give your best in this crucial moment?
  • How to successfully manage those funds?

Build a valuable contacts network

Building a quality business network is an investment you must make as an entrepreneur and professional. This network will give you visibility, leverage and above all will help you reach the right people to finance your business.
This network will allow you to access potential investors throughout the year, without the need to rely solely on the application periods of other more strict funding processes.

Get ready to get funds

The raising capital process for a startup -especially in the private sector- is quite structured, so you should always have at hand: a description of your business and an executive summary, a presentation, and a business plan. Let’s see these points one by one, along with other relevant topics.

Commonly, before arranging for a meeting, the investor will ask you to tell him/her by email what your business is about. First impressions are crucial, so it is very important to demonstrate clarity in your ideas and excellent communication skills!

Describe your business

Compare the description of your business to an elevator pitch. What can you say in 30 seconds? That’s exactly what you should write in the body of the email. Specifically, what is your business (product and market) and your team members.

Work on the executive summary

This summary must be attached to the email. As its name suggests, this is a summary of all of your business plan. Here you should give a brief description of your business, your reasons for starting it, your team, the required investment, and the project’s profitability.
It’s easy to get sidetracked and want to talk about your venture in depth. Remember, this is just the first filter to get funding and one where you will demonstrate your communication skills so get to the point.

A good executive summary is capable of:
  • Explaining clearly what the business is all about.
  • Creating interest in the reader.
I’ve already provided the requested information. Now what?

1. Prepare your presentation

If they liked what they read -and probably also investigated- you’ve passed the first filter.
Then, you will be asked to make a business presentation. This is an excellent opportunity to show who you are and with you will be a good investment opportunity for them.

2. Show how important this is to you

You’ve probably heard several times that investors invest in people and not in ideas. It makes a lot of sense to me. Finally, the industry experience, the passion of entrepreneurs, and their resilience are correlated with the prediction of their company’s success. Isn’t that what an investor is looking for? If they’re going to invest in you, you must repeat this phrase like a mantra:

“Not only must we be, but we must also appear to be”

 

You must pay close attention to the correct use of vocabulary, know your business in depth, and -of course- be genuine. Your interlocutors want to meet you, not someone who doesn’t exist. Be yourself. “Appearing to be” is an important part of your non-verbal communication, such as your personal presentation (which goes well beyond a tie or a pair of high heels) and punctuality. Being late for a meeting may be sending a message of disinterest to your potential investors.

3. Organize your time and ideas

Plan ahead. Find out in advance how much time you will have and which resources you will have at your disposal in order to adapt your business presentation accordingly. These steps will help you achieve your main purpose: to get an investor or company interested in financing your business.

In general, there are guidelines on what issues should be addressed in a business presentation, however, they are not mandatory. I suggest the following points:

  • Problems that your business solves.
  • Size of the target market.
  • Implementation capacity of your team.
  • Competitive advantage.
  • The current situation of your company.
  • Your plans and objectives.
  • Financial projections.

4. Present your projections responsibly

Making financial projections in a startup is difficult, especially because we are talking about a new company, with no background against which to compare. At the end of the day, your sales -also unpredictable- will be the most important thing, and you will have to present these projections alongside the factors that you can control and manage: your expenses.

5. Give a guided demonstration

If you already have a prototype, your minimum viable product (MVP) or the final version of your product, don’t miss the opportunity to show it live. A successful demonstration is worth more than a thousand business plans. We all know that you can write a lot of information on paper and this is your chance to back up all the above points.

6. Prepare for a due diligence

If you are being asked for a due diligence, it means that you have passed the second filter and you are on the right track. In short, This process, in short, is an audit used in the company acquisitions’ field to ensure that everything is in order, both financially and legally, to continue with the purchase.

In sum, everything we saw earlier must be able to explain clearly:

  • Why someone should invest in your startup.
  • How they are going to earn money.

Funding your startup requires you to be organized, focused, and clear when communicating your message. And, don’t forget to convey your passion and professionalism!

Also read: 6 funding alternatives for your startup

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