Fundraising may help your company develop, but it can be difficult to decide when to begin. Thats because getting financing isnt as straightforward as proposing a concept and receiving funding. Its a decision youll want to consider carefully. When you take money from investors, youre essentially giving them a stake in your firm. As a result, you dilute your ownership and expose yourself to outside evaluations and ideas. Investors are more than simply backers; theyre decision-makers who have a say in things like which markets you enter, who you recruit, and how you conduct product development.
If you believe youre ready to begin fundraising, follow these steps to ensure your success.
Talk to other founders: Consider reaching out to other entrepreneurs who have had success meeting deadlines and receiving funding. Inquire about what they learnt from their rise and what they would change if they had the chance. In particular, inquire about how they established their milestones, how much money they required to advance to the next stage, and whether or not their fundraising goal was realistic. Seek assistance from your company attorney:
Your startup lawyer may be able to advise you on how to prepare logistically for funding. You may need to legalize your concept, cross-reference your product or service with rivals, or file patent applications.
A realistic schedule is an important part of any fundraising strategy. Many business owners overlook how much planning, work, and money goes into the process. Making contacts, working through the approval process, and closing agreements will all require more time — and more of you – than you expect. Weve seen hundreds of startups go through equity and bank financings at Lighter Capital, and no one is ever astonished by how quickly an equity round closes or a bank funds a loan. It usually takes longer than entrepreneurs estimate, often months longer. If you believe you are unique, reconsider; it will take a long time. Youve already piqued the curiosity of your consumers or customers: If youre still working on your prototype but have a lot of interest in your product or service, you should take advantage of it and start approaching investors.
In six months, youll run out of cash and resources: Fundraising isnt something that happens overnight. Before you acquire any money, you may need to pitch and talk to investors regularly for three to six months. You may need to start looking for finance before youre 100% sure you need it to prevent falling behind or missing out on opportunities to get in front of clients.
You need to pique your end users or customers interest: When finances become accessible, it depends on the sort of product you develop and the individuals for whom you build it. Some investors, for example, would not invest in a consumer-focused product unless there is a huge waiting list of potential buyers, whereas investors supporting enterprises aimed at corporate or business-to-business audiences are less concerned with this.
Youve got enough cash to keep bootstrapping for a while: Consider the resources you have at your disposal, such as cash, skill, and equipment. You may wish to postpone fundraising for a time if you have enough funds from crowdfunding to continue bootstrapping your firm.