10 Ultimate Tips for Startups before going for Fundraising in 2020

    Sanket Dharia

    If you are a startup raising money for a cause you care, then there are ways to equip and motivate your startup ideas to raise money on behalf of your fundraising decisions. It is very important to have a promising cohort data, before you go for the fundraising event for your startup. Forming a startup is giving birth to a child, but, opting for fundraising is like raising a child. In this article, here are the best tips which will give you what exactly you need.

    Here are the simple yet promising tips for startups, before they can think of going for fundraising:

    1. Incorporating a company and setting up roles and responsibilities

    If you’re looking to build a company with funding, you will be a fundraiser for at least the next five years of your life. Networking and a lot of relationship building really matters when you’re trying to make your next raise. But before that it is literally important to have your company incorporated and following that to have set up your roles and responsibilities in the company. In order to form such a company, two separate roles must be filled, the director and the shareholder. For a company to run smoothly and effectively it is vital that a person filling either role understands their responsibilities and rights. Setting up the key roles and responsibilities of a company director, which will apply to most companies, is necessary.

    With reference to company management there are various stakeholders like directors, officers, managers and shareholders who guide a company towards the fulfillment of its business objectives. Management has been defined as “the process of planning, organizing, leading and controlling the efforts of company members and of using all company resources to achieve stated company goals.” Hence, the setting up roles and responsibilities of a company management is to maintain control over the company’s actions and performance, and simultaneously to lead, inspire and direct the people working in the company.

    2. Setting up your goals, objectives and vision for your long-term plan of your Start-up

    The first step of the startup funding process is to outline funding goals and objectives. Typically, funding goals and objectives are documented within a business plan and later in the investor pitch deck. These tools serve as the road-map for scaling fast, staying on track, and achieving startup funding goals and objectives. Make sure you set a goal!

    Having something to aim for always helps. And 9 times out of 10 you’ll end up doing better than you originally thought so aim high! Moreover, without these and other required documents in place, investors will have some difficulty seeing exactly where these funds will be allocated. Show investors how their funds will contribute to the success of your organization. What are you planning on doing with investors’ funds? Where will these funds be applied? The most successful startups go into great detail when it comes to resource allocation. Normally, you set your goal when you register, but don’t forget, you can go back and raise your goal as you start to see the fundraising dollars come in.
    Remember, you’re raising money for a cause you care about. Push yourself to raise more than you ever thought you could.

    3. Team-up with right Incubators, advisors and fraternity experts

    Form an advisory board. You get to choose who you ask, and the worst they can say is, ‘No’. Identify the most well-connected person in your network that you admire, and ask yourself, ‘What’s stopping me from asking them?’

    An Incubator- will help you figure out how to reduce your costs or ramp up revenues. As it takes a long time to raise a Series A and ‘we’re running out of money’ isn’t attractive to investors, an advisor or an incubator will help you to guide you in a right direction of fundraising.

    4. Prepare a Proof of Concept (POC) report from right Incubators

    Proof of concept (PoC) is a realization of a certain method or idea in order to demonstrate its feasibility or a demonstration in principle with the aim of verifying that some concept or theory has practical potential.

    Proof of concept (POC) is a working prototype that helps to establish evidence that the potential product/company can be successful. Developing a proof of concept report can help a company/product owner to identify potential gaps that might interfere with the success. It also provides the opportunity to solicit internal feedback about a promising product and reducing unnecessary risk. It provides the opportunity to stakeholders to assess design choices before full-scale implementation.

    Proof of concept (POC) is a contemporary methodology of evaluating the company’s status. It also evaluates company’s functionality flow to determine how it is operable and optimized with the live environment. Proof of Concept (POC) report gives you the ability to setup your own fundraising page complete with the ability to set your fundraising goal.

    5. Organize and Implement your right business model and revenue model

    The word “model” conjures up images of white boards covered with arcane mathematical formulas. Business models, though, are anything but arcane. They are, at heart, stories—stories that explain how enterprises work. A good business model answers Peter Drucker’s age-old questions: Who is the customer? And what does the customer value? It also answers the fundamental questions every manager must ask: How do we make money in this business? What is the underlying economic logic that explains how we can deliver value to customers at an appropriate cost?

    “Business model is the managerial equivalent of the scientific method”

    When managers operate consciously from a model of how the entire business system will work, every decision, initiative, and measurement provides valuable feedback. Profits are important not only for their own sake but also because they tell you whether your model is working. If you fail to achieve the results you expected, you re-examine your model.

    A revenue model is a framework for generating revenues. It identifies which revenue source to pursue, what value to offer, how to price the value, and who pays for the value. It is a key component of a company’s business model. It primarily identifies what product or service will be created in order to generate revenues and the ways in which the product or service will be sold.

    6. Get trained from your Incubators or advisors with right pitch deck

    To find the right startup investor, it’s time to perfect your pitch. Gather all your documents — business plan and investor pitch deck — and show investors why your business is a worthwhile investment. Look for opportunities to paint a compelling brand narrative. Why is your business worth investing in right now and what’s at stake if the investor doesn’t choose you? Incubators or advisors are the right people to guide you to perform the right pitch in front of the investors.

    Think of your pitch deck as an extension of your product/company. Iterate it continuously to make it as clear, concise and compelling as possible. If necessary, get help from your Incubator to make it really stand out. An Incubator or an advisor will help you to use story telling techniques to transform your presentation from flat to fantastic. You don’t need to say everything about your business. Leave out the minutia and focus on the most important parts of the investment case.

    7. Know your market size monopolizing your USP’s in the market

    Besides developing an exceptional product or hiring the right talent, doing some much-needed market research is the most critical step for any startup. A part of this research should involve market size. Without knowing your market size, you may be conducting business in a market so small, it’s next to impossible to make any money.

    Understanding market size helps you distinguish between two categories: the addressable market, which is the total revenue opportunity for your product or service; and the available market, which is the portion of the addressable market for which you can realistically compete. It will help you know how crowded is your industry and what types of company are there at the forefront. Lastly, it will help you to showcase your USP’s in the market to showcase in front of an investor.

    8. Understand the clarity about the fundraising and how long you want to opt-in for it

    A startup company can fund rounds indefinitely if they want to and there are investors willing to give them money, but that’s not really a practical strategy. In each round of funding, you offer a piece of your company to your investors. This piece of your company pie is the price you pay for their investment. That’s not such a big deal in the first few rounds since the company’s valuation grows as people invest, but after a couple of rounds of funding, the slices get smaller and smaller and, eventually, you don’t have much left to offer an investor. Remember too that the pie is your ownership, so each time you give a piece away you are taking it from yourself. At a certain point, it’s important for a company to either sell (like Instagram did) or to start trading publicly (like Facebook).

    9. Update your FAQ’s and investor-list which will drive competition among angel investors, PE’s / VC’s

    The same questions tend to come up all the time. Rather than make your main presentation denser, create an appendix with extra slides for each question. You’ll come across as highly organised if and when those questions come up in the pitch. Currently, the level of competition in market has increased. Thus, it is essential to match the standards of business world. Therefore, fundraising and funding activities should be sought after to improve the standards of business. Funding and fundraising together contribute to the growth of business by enhancing the level of startup according to highest level of competition in corporate world.

    The starting point for any fund-raising planning is to create a list of prospects. You can use Google sheets or CRM just internally for you and the people on your team helping you in the raise, or if you have existing incubators or advisors you can open it up to share with them.

    10. Focus, Practice and Perform on the plans, ideas and metrics

    The most important thing as a CEO is to have focus and to ensure no one lets you deviate from that focus. Hone in on focus from everything from product road-map to metrics. Every part of your organization should be aligned with your end story and goal. You must be able to speak intelligently about your mission and goals. Focus on which metrics you measure, and having a complete understanding of the market and its nuances.

    Every startup has financial business goals to be achieved. Hence, to attain the same, it is essential to seek funding. This funding process ought to take place in a timely manner so that it becomes easier to plan financial tasks in a simple way.

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