Most investors receive an overwhelming number of pitches every day, though only a few get noticed. If you have to be one among those with a compelling pitch and wish to have investors come calling, then you must have a business idea that’s not just innovative, but viable as well. What is it that makes your startup worth funding in?
When you come up with a new idea it is very critical to source startup funding to keep the business operating for the first few years. However, it’s not as simple as it sounds; it requires a lot of groundwork and convincing on your part to compel investors to fund your business venture. However, the good news is, there are several resources that help you track the right people, the right way.
Here are some tips to help you sail through this challenging task.
Lookup for Startup Launch Platforms and Angel Investors
These connect you to potential investors. You might also want to browse through crowdfunding sites that provide access to different kinds of investors who might be interested in your idea. Sometimes, it could be someone from the general public or an accredited investor whose business interests may be aligned to yours. You can find more details on these and more such sources here.
Know your Numbers
If you love to play with numbers and are particular about calculations, then calculate ROI to evaluate the profit derived from the investment. You might also want to access the NPV (Net Present Value) and IRR (Internal Rate of Return). These might be useful for those products with a long development lead time and whose returns vary every year. For details on how to calculate these, look up here.
Create an impressive Business Plan
This is crucial and must lay out clearly your business plans, target audience, and projected sales for the next couple of years. Make it look professional; you can browse through templates available online. You must be ready with answers to some obvious questions.
- Is your idea useful enough to solve your customer’s problem and make their life easier?
- If yes, do you have a specific solution and how is it better than what your competitor has to offer?
- What is the size of the market that you are targeting?
- How to you intend to make money and sustain the business?
- How different are you from your competitor/s?
- What are your marketing plans? Do you have a qualified team with requisite credentials and skills to handle their job well?
- What kind of funding are you looking at? How much equity can you offer?
- Do you have a projection charted out for the next 5 years in terms of revenue, expenditure, cash flow?
- Do you have a plan for exit strategy—Merger/acquisition or public stock offering?
Hire an Expert
If you don’t have prior experience, it makes sense to hire an experienced consultant. S/he can assist in convincing the investor for you. Tell them how your startup is different as against your competitors. You could tell them about patents and differentiators that place you ahead of the competition.
Know your Basics Well
When you are reaching out to an investor over mail be careful to choose your words. It should not look like one of many messages you’ve sent out. Just as you need them, investors need you too. So, take the time to generate attention. You may hear a lot of “Nos”, but remember that’s part of the game to help you make corrections and move ahead.
All that is needed to make your business idea worthy of investment is smart planning, effective delivery and a professional attitude. At the end of the day, it’s all about how passionate you are about your new venture and how well you put it across. It’s not always lengthy presentations or statistics that make the cut, rather it’s the uniqueness of the idea combined with your effective communication that will decide the outcome.