Raising Funding: for New Startups

Guest post by Innovate UK

FIVE TIPS FOR SUCCESSFULLY SECURING CAPITAL

Securing capital for any kind of business venture almost always tends to be more difficult and convoluted than those involved expect. You’d come up with an excellent idea and you believe you have a pretty good notion as to how it will be put into action. As such, potential investors should technically be beating a path to your door, right? 

Well, given the fact that this is the same way of thinking adopted by thousands of plucky entrepreneurs each and every month, it really isn’t particularly realistic. Instead, it is up to you and you alone to fight tooth and nail for the funding you need to get your business off running – whatever it takes.

So for those taking a proactive approach to securing startup funding though perhaps in need of a little guidance, the following five tips from leading investors could prove invaluable:

 

1 – Expect Delays

First of all, it is a process that cannot be rushed and even if you invest enormous time and effort in the endeavour, chances are it will still take time to come to fruition. The more you try to rush the process, the lower your likelihood of success – it really is as simple as that. Even if you manage to win over your chosen investors, it never tends to be a process that moves as anything other than a painfully slow pace. Plan ahead, exercise patience and know that if the outcome is worth waiting for, it’s time well invested.

2 – Know Who to Ask

Research has shown that the single most common cause of failure among those who unsuccessfully seek funding is giving up too early, without having first explored every possibility. Depending on how much you are looking for and how it is to be used, there will be certain sources of funding that are both readily available and off-limits. Nevertheless, there will undoubtedly be dozens of different funding sources to explore, which go far beyond the most obvious examples. If you cannot say that you have literally explored every startup funding option in existence, you are giving up too soon.

3 – Business Plan

There is only so far your pitch will get you – usually through the door and within earshot of any given investor. After this, it’s a case of relying on your comprehensive and quite simply superb business plan to give them the full inside scoop on your proposal, your projections and most importantly, your potential. You need to be able to dissect your entire business strategy right down to its fundamental elements, in order to clarify and quantify each in minute detail.

4 – Financial Projections

One of the most important elements your business plan should contain is a strong and believable set of financial projections. You more or less need to have the on-going performance of your respective company detailed right down to the very last penny. It’s a case of being able to show them what their money is to be used for, why it is required for such purposes and of course, when you and they alike can expect to see returns.

5 – Sensible Sums

Last but not least, it doesn’t take a genius to figure out that if you ask for too much money without being able to justify it, they won’t go near you with the proverbial barge pole. Not only this, but higher sums of money are for obvious reasons more difficult to come by than smaller investments. It’s therefore critically important to make sure that the sum you request is sensible and justifiable - exactly what you need to reach your targets and to make your business a reality.

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Rishi Chowdhury

Rishi is the co founder of IncuBus Ventures. His background is in marketing and business development. He previously worked as the online marketing manager for one of Europe's fastest growing startups, Huddle.

Rishi also has experience of running startups himself, with one success, one failure behind him. He also  has advised and consulted over 20 early stage startups as well as over 40 alumni of IncuBus Ventures.