As you progress through developing your startup, you need to plan to develop a solid business strategy. At this point, you should consider the real opportunity of your startup. wheat gives you the edge to win it, and how you are going tot fund it. As part of a comprehensive solid business strategy, we should dive into how an entrepreneur should finance the venture.
Fundraising is a difficult but necessary undertaking to scale most enterprises to high revenues and dominate an industry. Whether the funding round will be from angel investors or venture capital, a founder must be well prepared for the demanding tasks.
Find a neutral source of experienced feedback - Before you start pitching to investors it would be wise to get experienced feedback from an unbiased source that will tell you problems they see in your proposition.
What type of funding do you need? - An intelligent entrepreneur would strive to understand which type of investment structure would be the most advantageous. Sometimes an angel investors with vast industry may be more valuable than a venture capital fund, On the other hand, if you aim for lofty revenue goals and have a plan to see it through with much more capital, maybe a funding round from large firms may be in favor.
The more you prove, the more you keep - As a founder, you must do your share of due diligence in research of competitors in the market, and achieve results with your solution to a pain point, and do what you say you will do.
As an intelligent investor, the best way to conduct investor prospecting is to build an organized pipeleine with CRM ( Customer Relationship Management) software and decide on the value add, timeline, and size of the investment you would prefer. For example, if you are fundraising from a fund, you can expect a long time of due diligence before a decision is made.
Just like the investor, you should understand your business model, and know who you are, you should make an effor to also get to know your investor. Ask about their previous investments, and show you value their brains and not just their bills. Perhaps consider talking about their hobbies, if they will be investing their time and money in your company.
What is the problem - The pain you aim to solve should be so strong you can almost feel it physically? The deck should position the problem in a way that does not seem like a band - aid, instead, it should be seen as a solid fix of the potent problem.
How are people solving this problem today? Every pain point has some form of competition. Before pitching to an investor, you should find any semblance of competition in your industry. Investors would like to see that you understand your indirect competitors.
Why would they pay your company to solve it? - No matter how great the product seems on paper or hwo the problem in question is solved, would target customers pay your company to solve it? Investors need to see a path to high revenue, and achievement of positive cash flow.
Lastly, you must ultimately be able to answer the question: Why You? Investors want to knwo why you are the founder that will lead an enterprise to successfully answer an acute pain point.