Rohit Manglik – Think about an entrepreneur who dreams of starting a business without raising funds. Sounds unrealistic, isn’t it? Capital is the powerhouse of a flourishing startup. The machinery of a profitable business startup can only run with the fuel and lubricant of funds. It is accepted by all that maximum startups collapse in their inceptive days due to bankruptcy.
For this factor, all business visionaries flounder in the quest of reliable investors. Fundraising has always been a self-loathing process for startup founders. Despite this, they run for the lust of money to build their business empire.
How to pitch your product to the investors?
Every entrepreneur comes up with an innovative idea but not all of them get funded. Most of them introduce their tremendous project plans to the investors, then too, the investors go unconvinced. It is simply because investors don’t trust words but actions. After all, nobody likes to throw their hard-earned money in thin air and hence, they fund products, not mere ideas.
Learn to present your vision in a pleasing, professional manner. Show your growth potential. Have a replicated business model and clear strategies for your startup. Show your investors that you can build a firm bridge over the bottomless abyss of trade. Only then you will be able to engrave your idea in their minds. This is the intermission of your success story. The remaining relies on your startup strategies.
Now the question arises that who are these people who manifest interest in other’s startups? And why do they trust peoples’ startups with their money? So, let me tell you that investors are people who commit capital with an intention to grow their money.
A businessman can adopt one of these four potential avenues to attain funding.
Friends and family
For the newcomers in this dynamic business world, it is challenging to move the investors with their startup plans. No matter how convincing they sound, but capital-holders doubt their proficiencies. In this case, friends and family emerge as concrete plinths.
They easily sanction money and exhibit confidence in your startup. Cash is readily available from them. There is negligible worriment of loss of goodness. Reimbursement is easy, and the rate of interest is supple. You also need not dissolve your possession over your firm.
Despite these merits, seeking funds from personal sources has a few loopholes. Funding from friends and family oppresses the startup founder with various expectations and responsibilities. This often creates hindrance in focusing on the startup plans. Furthermore, you might also end up getting undesirably awkward in your pleasant relationships.
To prevent such distresses, always prepare a legal document confirming the funding deal and related terms and conditions. The nature of the fund must be bright-lined for both, you and the investors.
“Want to grow in every aspect? Do three things, then- learn, learn, and learn. Pass your every hour that assists you in learning! You can utilize the time you sleep in learning in the sense that you are preparing your body and mind for meeting challenges further. When you relax by watching a movie or listening to a song, concentrate on the message that the movie or the lyrics of that song convey to you. Learn from them.”
In this world of entrepreneurial startups, angel investors are readily welcomed by businessmen. Angel investors are not altruistic but are high-net-worth individuals who provide financial assistance to small-scale startups in expectations of high returns. They don’t lend to get their sum back, rather they invest for the increasing value of the company, generally, in exchange for the ownership stake.
Unlike bank loans, the capital borrowed from angel investors need not be repayed in a fixed timespan. Instead, angel investors hold a share of your startup. Therefore, a lesser risk is associated with such debits in the case of losses or breakdown.
Angel investors are adventurers of the business world. They realize the acute risk involved in investing in a stranger startup, then too, they lend money to kickstart them. Mostly these angel investors are entrepreneurs themselves and hence, they are the launchpads of fresh ideas for the blooming of your startup. Furthermore, for an inexperienced startup founder, angel investors serve as guides by sharing their prowess.
Asking for funds from angel investors is beneficial to an extent but hunting for one is a tedious task. They are not readily available, and they rarely show interest in every startup. After all, one individual cannot fund all the startups that approach. Additionally, they invest in the greed of heavy returns, failing which they pressurize the owner. They also exercise control in the decision-making of the company and this may lead to clashes.
“Want to succeed in life? Educate yourself and the people around you. You can educate yourself even from an ant. Learn from it the values of perseverance and labor.”
Raising funds from venture capitalists is fascinating for the rising businessmen. You just need to carve your ideas in their brainbox and capital will follow your way. Venture capitalists are capable of investing in huge funds in non-established startups. Obviously, a million-dollar cheque can easily render you with sufficient man force and material to stimulate the growth of your startup.
Moreover, venture capitalists also come up with fruitful strategies to cultivate your startup and they also advise you on various critical aspects like legal matters regarding business. Additionally, these VC firms are firmly rooted in the business grounds and hence, they have outreaching connections. These assist the new entrepreneurs to easily climb the ladder of success.
However, you might also face some shortcomings while going for this option. Venture capitalists provide financial backing to gigantic and profitable firms only with an intent to earn massive returns. Furthermore, they lend capital on an equity stake and hence, individuals from these VC firms consistently impede the decision-making activities of your business.
“The day we begin to imagine and inherit while we read is the day education achieves its unsaid and unwritten goal.”
Arrange crowd funds
Crowdfunding is picking up pace in the modern business discipline. Here, small business founders unveil their startup designs online for the vast capital donors. These investors contribute a small amount of money resulting in a huge capital reservoir for the new-age startups. There is a glut of websites that felicitate crowdfunding.
With the crowdfunding technique, you can hit two targets with a single arrow. Firstly, you raise funds for your startup to blossom. And secondly, you get a platform to digitally advertise your product without bearing any advertising cost. Once you present your product to a few fund-holders, it will float to a broad spectrum of investors itself.
Crowdfunding seems flawless from a distance, but a closer view provides a clear picture. Often it fails because the startup owners are unable to convey their core ideas to the investors. Another pitfall of crowdfunding is that the supply of money is limited and to stretch your wings wider you cannot rely alone on crowdfunding. Besides this, a slice of profit is also distributed amongst the investors.
“Knowledge is the power to liberate yourself.
Information that you avail from knowledge is liberating too.
In every family and society, you will find progress preceded only by education.”
There is a pool of fund-raising options available, but you must choose the one that fits your startup the most. Generally, entrepreneurs quiver their own piggy banks in the initial years. But in later stages of business expansion, they are compelled to nudge the cogent investors and capitalists for funding their startups.