Where To Go For Startup Capital
If you don’t have much experience running a startup, then you may find yourself struggling to secure funding. But, as long as you’ve got a good product/service, you should still be able to attract interest from potential backers.
What's in this article:
Startup capital is essential if your new venture hopes to succeed and become profitable. Without it, starting up can be extremely difficult. However, not all businesses have access to traditional bank loans or other forms of financing that they need to get their projects off the ground. Fortunately, there are alternative ways to raise money from private investors, crowd funders, angel groups, VCs, banks, crowdfunding platforms, and more. In fact, some startups even use multiple methods at once!
Angel Investors – You could try pitching your idea to angel investors first since angels tend to look more closely at ideas than larger funds. However, most angels won’t put up large sums unless they think they can really help turn around the company’s fortunes. So again, you’ll likely need to show them something concrete before they’ll commit.
VCs – Venture capitalists are typically large institutional investors who make big bets on promising young firms. They often take minority stakes in such companies, helping them develop over time. Some VCs also offer debt facilities to support growth.
Crowdfunding – A relatively newer form of fundraising, crowdfunding allows anyone to contribute towards a project by donating online via websites such as Kickstarter.com. These donations range anywhere between $5-$10,000 depending on the campaign.
Banks – Many banks now allow startups to apply for lines of credit based on future revenue projections. As part of the application process, founders must demonstrate that they have sufficient collateral to back up the loan.
Friends & Family – One of the easiest options for securing startup capital, friends and family members are always willing to lend a hand. Just remember to set clear expectations upfront regarding repayment terms and ensure that everyone understands the risks associated with lending money to a fledgling firm.
You have everything needed to get yourself started in the business playground, i.e. the idea, the ability, the people, etc. everything needed except the fuel to start your journey in the business world that is the capital!. You need it and there are some people eager to give it. Welcome to the world of Venture Capitalists.
What Is Venture Capital Anyway?
In simple terms, venture capital refers to the financing provided by outside parties to fund new businesses or projects. It’s essentially like “angel” investing, except instead of individual people providing the initial funding, larger institutions pool their resources to give smaller sums of money to promising start-ups.
The problem here is finding those investors – but once you’ve found them, you’ll want to convince them why their money is better spent investing in your company rather than another. This may mean convincing them about how much potential market size exists for your product/service, as well as explaining why they’d benefit from being involved early on.
It also means making sure they understand the risks associated with taking part in this kind of venture. You might even consider getting legal advice before approaching these types of investors.
How to get VCs interested in Funding your Startup?
So what are the ways to win the mind of ace VCs except for that good plan which will make them invest in a start-up by someone who in all probability does not have a proven background in business? There are ways and they are effective nevertheless to place you nearer to that fund.
Some of them are given below:
Present a unique feasible idea not a ‘killer idea’
The basic step is to have a unique practical idea that is easy to implement, is well researched, and has the capability to penetrate the market in that particular segment. Don’t bet on fancy ideas which in no possibility, are applicable and can be implemented. Such an idea will only kill your chances of getting that funding.
Research and homework
Often these are the factors that differentiate an amateur and a true professional, for example, if you are keen on the logistics sector know your competitor, offerings, market, government, policies, hurdles, etc.
A well-documented business plan
A business plan is your ambassador which will speak for you and as goes with every good speaker it should be comprehensive and reasonably short. Long plans are not the good ones!.
Venture capitalists will fund startups based on how well-known the brand name is. If you want to raise funds through venture capital, you’ll need to prove that your concept is worth investing in. This means building up a strong network of contacts who can vouch for your credibility. You might even consider starting a blog or website where you talk about your ideas so that others can learn more about your vision. If you are still a student make sure you have a good rapport with the department head or the VC.
If you have a background that shows your entrepreneurial capability, then focus it for example collecting the largest fund for that relief work or organizing the biggest and the most successful fest in the university.
Your appearance should be that of a pro and body language should be positive. Maintain good eye contact.
Keep a list of VCs ready
Last but not least if the above steps do not work don’t get disappointed and move on to the next VC ( be specific on your sector).
Why Should I Care About Venture Capital?
There are two main reasons why you might care about venture capital. First, if you’re planning to go ahead with starting a business, you’ll probably need somewhere around £100k to get going. That’s not exactly pocket change, especially considering that you won’t actually see anything until years later. Second, venture capital gives you access to other forms of financial backing, such as loans and grants. Without it, you’d struggle to get started.
So what does all this mean for you? Well, if you plan to run a business, you’ll definitely benefit from having access to venture capital. However, if you aren’t sure whether you want to pursue entrepreneurship, you shouldn’t worry too much because you could simply choose another career path.
The most important thing to remember when seeking venture capital financing is that there are no guarantees. You must do your homework before approaching any investment source. Read up on each firm’s track record and reputation so you know whether or not you want to work with them. Also, make sure that the terms of the deal are clearly spelled out beforehand. Finally, don’t forget to ask yourself why you need additional funding at all! If you already have enough resources to build your product, then perhaps you shouldn’t even bother applying for more money.
If you decide to apply for venture capital funding, here are five steps to follow:
Find Out What Types Of Funding Are Available To Your Business Type.
There are two main categories of venture capital funding: angel investors, and venture capitalists. Each category has different requirements and expectations. For example, angels tend to prefer younger companies whereas venture capitalists look for established brands.
Determine Whether Or Not You Need More Money.
Before you approach anyone for funding, determine how much money you actually need. Do you really need $100k? How long would you need to raise that amount? Is it realistic to expect someone else to give you the entire sum upfront? Will you be able to get other sources of revenue?
Decide On Who Should Be Involved With Your Project.
Once you figure out exactly how much money you’ll require, who should be involved in making decisions regarding your project? Ideally, you’d want people from both sides of the table – those who understand the technical aspects of building your product and those who understand marketing and sales. However, sometimes it’s necessary to bring in outsiders to fill certain roles.
Write An Investment Proposal That Clearly States Why You Want Their Help And Exactly What You Expect From Them.
When writing your proposal, keep in mind that you’re asking for something very valuable – namely, access to large sums of money. Make sure that everything you say is backed up by facts and figures. Don’t just assume that because you think you need X dollars, everyone else does too. Explain why you believe you need the money and show how you plan to use it wisely.
Get Prequalified By Potential Partners.
After submitting your proposal, you’ll likely hear back within days. At this point, you’ll either be accepted or rejected. If you were accepted, great! Now comes the hard part – convincing potential partners to take a chance on you. This can be done in several ways.
- If possible, try to meet face-to-face with as many prospective partners as possible.
- Send an email outlining your plans and explaining why you feel like they will benefit from partnering with you.
- Create a video pitch highlighting your company and its goals.
- Write a blog post describing your vision and offering some insight into your background.
- Attend local events such as startup fairs and conferences. S
- Reach out via social media.
- Contact press outlets directly.
- Network with friends and family members.
- Consider hiring a public relations agency to promote your brand.
- Hire a professional copywriter to craft a compelling story about your company.
Lastly, always remain positive and optimistic during these initial stages. Remember, you only get one shot at getting funded. So, make every effort to ensure that you present a strong case for why you deserve the opportunity to receive funding.