12 Tips for Raising Seed Funding for Startup

When you have come up with an innovation that could earn you big money, you just don’t sit there and wait for it to happen. You do something to make it happen, right?

Every startup has different requirements, depending on what market needs that your innovation is promising to address. But there is one major requirement though, that is common to all startups: funding. Before addressing this need, let us start by defining what a startup is, so you will know exactly what else you will need, aside from raising funding for startups.

How to fund your startup? Is there any unusual formula to receive funding? Why investors are funding in other startups? What tactics help startups in receiving funding hastily? Of course, these and many other questions knock in startups’ mind daily. But sometimes getting a correct answer for all these questions turns out to be little difficult especially for those who are just starting out on this path with a business idea which is in the incubation stage. If getting startup funding was so easy, every idea would have funding, but in reality, this is not happening. Well, before you reach out to investors, you need to do your homework on various ends to make sure that your business idea has a real market value and capability to survive. You need to have an innovative idea, well-planned business plan, skillful founders’ team and a lot of information to clarify everything to the investors. Moreover, there is no specific formula to get funding for your startup. However, the points explained below are keys to consider when you approach investors for seed funding. Let’s start with pre-homework;

Defining a Startup

A startup is a new company created to develop or grow rapidly for addressing an emerging market need. A startup usually comes up with a new offering that can be sold to a large market. Startups, however, are not necessarily always tech-oriented.

Another characteristic of a startup is that it is considered high risk, or has a high failure rate since the new idea is catering to a nascent market. Typically, it is made up of individuals who are lured by the tremendous growth and immediate impact that the endeavor promises.

So if you have a breakthrough idea and are seriously considering to get seed funding for your startup, here are seven tips you should keep in mind:

How your business is a solution to a problem?

Ensure that your product or service is solving a problem that huge numbers of people are facing. Investors don’t get inspired with beautiful designs and colors unless your business is not actually solving a real problem. If your idea is solving a problem about that even consumers were not aware comprises high potential to attract investors’ attention.

Do you have customers?

Apart from your friends and family how many people believe in your idea? Go out and look for people who have the same problem and believe in your idea as the real problem solver. It will also help you in finding some genuine customers for your business. These customers will act as a proof in front of investors that your business idea carries the potential to hit the market.

Is your idea powerful money making mantra?

Don’t know how to make money from your idea; how to execute your idea for profit? Well, if your business model is not powerful for money making, it is of no use. Nothing is great than presenting a precise and well-planned business model in front of investors.

Master your plan

It is important for you to be clear and concise about what your startup is and why investors should support you. Be prepared to provide compelling answers for two basic questions—who are you and what you are doing? They would also want to find out who your startup team is, your product, your customers, and your story. When proposing to potential investors, be convincing enough. Master your plan by heart; going the extra mile won’t hurt.

Perfect timing, right funding for startups

So when is the right time to raise funds and how much would you need? It all depends on how ready you are and you have already figured out how much you need. Aside from preparedness, be ready to impress—show potential investors a few relevant metrics. Let them know how much success you have experienced in terms of your product sales and share your customer feedback with them. You might think you would need all the money you can get, but it doesn’t work in all cases. It depends on the kind of startup and the product you are offering.

Are you taking your customers to feedback positively?

Mostly startups ignore their first customers’ feedback as they assume that their idea is more powerful. But ignoring customers’ feedback means you are giving investors a chance to dump you at the first stage. Actually, there is a lot to know about any product or service and customers are the best source for getting real information about them. Customers and investors can see the potential of your business idea better than you. Furthermore, by matching and comparing customers’ feedback with the data provided by other information sources, you can answer investors’ questions competently.

Incubators & accelerators

With the number of new undertakings nowadays, startup accelerators and incubators have become commonplace. Accelerators and incubators help startups to attain the success they desire at every stage of development. They provide mentor advice and infrastructure facilities for startups to help them succeed. These may not necessarily be dedicated to each startup but have enough resources to be shared with other startups for a specific period.

What is completion in your segment?

Why knowing your target market and competition is everything for a startup? It is important as it helps you to understand exactly who is in your direct competition and what they are doing. Investors believe understanding competition prevents business failure as it prepares founders to lessen risks and become adaptive towards changing the market. Research is the best way to know all about market competition.

Are you really looking for seed funding?

There are a lot of other ways to get funding for a startup. Think wisely on what you want for your startup. Get the answer from you for what you will do with the raised amount. Investors want the concrete reason for why you need funding and how you will use it in your business. Taking a bank loan could be a solution but before that be clear about what you will do with the loan amount and formalities to fulfill before loan passing.

Do you have facts and figures along a simple story to show Investors?

Your business plan will be more impressive if you compile all your data, figures, market size, etc in order. Compelling storytelling to show the potential of your idea will be the icing on the cake.

At last, seed funding helps startups to capture the attention of those investors who want to get in early in a budding startup and exit rich. They get a certain amount of stake and invest in a startup. So without wasting your time start thinking on the shared point. However, before approaching to investors make sure that you do not have greediness for getting seed funding anyhow. Moreover, it’s not necessary that startup life will become easier after rising funding!

Do you have a killer combination of skillful founders or team members?

Investors love to invest in those ideas which have a killer combination of skillful founders or team members. They believe that failure chances are less when a business idea is grown under the supervision of capable people with the right set of skills. If you already have skillful people in your startup team, it will act as a winning combination. If you don’t have, please get some on board to add value.

The power of online crowdfunding

Never underestimate the power of digital media. Go online and start a crowd-funding campaign. Tap friends to spread the word. Be as creative as you can get. If you get this right and you are convincing enough, you will be amazed at how much you could raise. Going online will not just help you raise funds, this could also widen your network.

Birth pains are always synonymous with new undertakings. Don’t be afraid to fail the first time. Figure out what went wrong, study how it could be corrected, and start over. In the end, what matters most is your belief in the potential of your ideas.

Source: indianweb2 And ecoideaz

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