Every big company starts as a startup. Steve Jobs’s Apple, Mark Zuckerberg’s Facebook, Bill Gates’s Microsoft – all were startups. One of the main differences between them and millions of unsuccessful ones is that they found the funding. It could be their finances, relatives’ monetary savings, who believed in them, or investors’ support. The main thing – they had funds. If we refer to statistics, we will see that less than 1% of startups get investment capital. It is a sad situation, and you should solve the problem of finding the investor. The good news is that this article will help you to cope with it.

How to Get Investors for a Startup: First Steps

Let’s outline the startup fundraising scheme to understand how to find funds. There is no problem that won’t become easier with a more detailed knowledge of its process. The fundraising scheme levels are Seed, Series A, Series B, and Series C.

stages of a startup Fundraising

Everything begins with seed funding for startups which is also known as seed capital. It is the finances you have before looking for investors. At this stage, you must decide whether you have sufficient money to develop your startup on your own. If the answer is yes, that’s cool, and you get the opportunity to bootstrap. Bootstrapping is the kind of growth of your startup when you depend only on your money or profit from your startup. This means that external investors will not be involved in the process. 

  • Series A, you meet your first investors.
  • Series B assumes you have such a result that can prove its reliability
  • Series C and the next stages demand even higher results from your startup

Types of Fundraising Strategies

So, we have considered the financing process. Now, it is time to observe the types of fundraising approaches. It will help you choose the one that approaches your startup.
Such ways to get financed exist.

Angel Investors

Angel investor is the perfect type for stage A because such a person is ready to make a high-risk investment without high requirements. The best way to find Angel Investors is by checking out updates on appropriate platforms about different meetings dedicated to problems your startup is solving. As a platform, you can choose Gust, Angel, or Angeling. Each of these will satisfy your needs.

Venture Capital

Venture capital is a form of investment in startups, a sense of which is that big companies or investment funds finance what they want. Everything is clear about companies; let’s figure it out with funds. Investment Funds is an organization that accepts contributions from its participants. As a rule, these funds have a person, called a venture capitalist, who operates all of the organization’s money.
Looking for venture capital is different on distinct platforms. Generally, the main difference lies in how you reward the platform. In the case of Kickstarter, for instance, you need to set a reward for funding by anyone, unlike GoFundM, where you do not need to do it at all. Indiegogo has a completely different approach. On this platform, you pay up to a 9% fee to use the platform’s features.

Business Incubators (BI)
BI are organizations that not only help you launch your startup. Yes, they are very useful at the seed stage, but they also give you an understanding of how to do your business. It is an important difference. Business incubators provide many lectures, during which you can meet famous entrepreneurs. It is an indispensable experience. The most well-known BI is Ycombinator. The most engaging thing for you is that this organization chooses the best startup it thinks and invests more than 100K$ in it. It happens two times a year.

Initial Coin Offering (ICO)
ICO is a new technology whose main purpose is to change the way investors get a reward. Unlike the traditional method, where investors have a percentage in your company, you just sell them cryptocurrency. Due to the popularity of ICO, finding a platform that can help you with it is easy.

What Needs to Be Done Before You Meet Investors

You should prepare for a meeting with your future investors. First of all, be professional. You should not show your emotions; leave them for your friends and close relatives. For everyone except them, it is necessary to show a responsible approach to business. It will give an impression of you as a serious entrepreneur. Before searching for funding, you need a prototype and a Pitch Deck.

Things you need for fundraising

Prototype
If your startup is a software, it is necessary to have a prototype. It is not about a completely working product. It is like a demo of your idea. For instance, you can build an MVP version of the product you want to implement and test the general features you want to provide. You need to find a reliable partner among the top mobile app development companies to build MVP for your startup.

Pitch Deck
Pitch Deck indicates the value of your product with the pictures. To simplify, it is your startup presentation you can demonstrate to your future investors. You can use different programs, varying from default PowerPoint to professional software. Your product’s information must be short but exhaustive in your presentation.

Fundraising Mistakes Which Can Kill Your Startup

There are different reasons why investors can reject to finance your startup. Let’s observe the most common ones:

common reason why investors refuse

Obscure niche
Always collect a large amount of information about the niche you want to come in. The situation when a startup enters with a lack of understanding about its market area is not rare. No one wants to cooperate with an unprepared entrepreneur.

Copied idea
Your startup should not be a copy of the existing project. Every copy will always be worse than the original, so you definitely will get the refuse. Imagine you are an investor. Would you want to invest in a startup with a non-unique idea? I think not.

Inflexibility
You can never be aware which idea will give you a good result. Because of this, you need to be ready to change the vector of your deal if you find a more promising idea. To consider which idea is better, you can always consult with your marketing specialist or just ask your own clients.

Bad developers
Do not forget about such an important part of your business as staff selection. It is one of the most vital stages on your road to becoming a successful entrepreneur. Bad employees can ruin even the most promising idea. You need to follow team-building activities to enhance productivity and overcome this challenge.

One founder
The reason why startups often have one founder is understandable. The situation where people do not trust anybody, even close relatives, is usual. And it reduces the opportunities to be ready for different marker fluctuations.

Wrapping Up

Looking for fundraising is a very hard stage for every beginner entrepreneur. You need to put in a large amount of effort to pass this challenge, always paying attention to avoid mistakes and follow the advice you get today.


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