10 Things to Do BEFORE Seeking Funding
Seeking funding before your startup is ready is a surefire way to make sure you WON’T get funded. First impressions are crucial: ensure you nail yours by taking the time to prepare.
- ) Create a business plan.
We’ve discussed the importance of a business plan in the past, but it really can’t be talked about enough.
Especially for the purpose of pitching, a business plan shows investors you are serious and are already investing effort. Further, a business plan should be able to stand for your business on its own — not that it will necessarily need to.
2. ) Do plenty of market research.
I’ve been to plenty of pitch nights and One Million Cups events where investors will ask about the market research conducted and pitchers will stand there dumbfounded, which I can only imagine would be incredibly embarrassing.
In addition to avoiding embarrassment, market research is very important to ensure you actually know there are people interested in buying your product/ service if you are able to produce it.
3. ) Make a 5-year plan.
Investors want to see your intentions for their money that far out. If in 5-years you don’t see yourself making money, investors should be skeptical.
This doesn’t need to be overly specific, but it should have enough information to prove it has been thought through.
4. ) Identify potential customers.
Identifying potential customers goes hand in hand with market research. If you aren’t sure there are people that will buy your product/ service, it will be difficult to convince investors there are.
5. ) Invest personally.
Whether with your time extensively or with actual funds, potential investors want to see you are actually invested in the project. Without that, it is easy for you to walk away and leave the investor high and dry.
6. ) Create a brand. *
This one is debatable, but creating a brand- a logo, name, etc- can be very impactful for seeking funding.
When you see companies successfully raise funding on Shark Tank or Kickstarter/ IndieGoGo, they usually either have an amazing product/ service or a compelling brand.
7. ) A specific funding goal.
This should be $ X for X %. Potential investors will likely negotiate, but you need a starting point so you aren’t giving away half your company in exchange for advice.
8. ) A payoff.
This is most important to identify in crowdfunding campaigns where the amount invested can vary greatly. Create rewards specific to your campaign and investors will see benefit not only in being a part of your project, but also in receiving an exclusive reward.
9. ) Start creating your team.
Even the best of ideas can fail if you have a bad co-founder and it’s hard to base a company around an app if you don’t know any developers.
You by no means need your entire team figured out, but you should have key players identified to ensure your company can accomplish something once funded.
10. ) Do your research on investors.
On Shark Tank, pitchers usually try to give each of the investors an item customized specifically to them (sometimes their favorite flavor for food or favorite color.)
Take a similar approach with your investors. Whether you are utilizing traditional or crowdfunding to reach your goal, make sure to target your messaging to your investors’ interests.
Seeking funding is an exciting step in your startup. Take the right steps to give yourself the best chance possible.
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Leeward Business Advisors is a Wisconsin-based corporation that provides business strategy planning, business improvement implementation, and full IT operational support. They offer world class Cloud Computing services, Cloud brokerage, Managed IT services, and a full US based Support Service Desk (called Quick Answers). Michael Polzin, CEO has 20+ years of enterprise business and technology experience gained while working at Allstate Insurance and Microsoft Corporation. Jason Klein, CTO has 15+ years delivering effective and efficient technology to Midwest companies.