There are several do’s and don’ts for all the startups to help them realize the rules they should follow to attract and keep investors. No business can ever start without some initial funds. Capital is the backbone of all startups, without which further processing cannot be done. Therefore, if you consider raising funds for a startup, read this article until the end.
Do’s
- Educate yourself about the various ways to raise funds. The more you learn, the more opportunities you have at your disposal to raise a good amount of capital.
- Make moves to identify potential investors in your market and industry. This will prove to yourself and investors how dedicated you are to the business. Such an attempt will create a good image in the market and attract investors to you and your business.
- Do not spam your investors. Make contacts and then let them know about your business. Investors trust their contacts; hence, they will be more interested in your offer if they hear it through a person they trust.
- You need to add talented people to your team. Investors will often bid on your team more than your business. If your team impresses them, they will definitely invest. However, if they do not see any potential in your team, it will be impossible to convince them to take on that investment risk.
- Invest in yourself. When your investors see your and your family involved in the company, they will believe you will do your best to make your business succeed.
- Create a solid business plan and take the initiative to show investors that you are serious about success.
Create a small portfolio to make the investors believe that you have the skills required to bring the plan to fruition. - Stay organized! Even if that does not matter to you, it matters to your investors. They want to see you organized and in order. It creates a good impression in their mind if they see you attentive to detail and organization. If you come across as a disorganized person, they may refrain from investing in you and your startup.
Don’ts
- When determining the capital you need, do not quote the exact figure you calculated. Always quote a larger amount. As the amount is hypothetical, you cannot be sure how much more it will take to start the process and build your business. There will be unforeseen expenses; therefore, quote a larger amount to investors.
- During the contract of investments, you will have to agree to specific terms and conditions from the investor which you might not like. However, it is advisable not to agree with the terms that bind or restrict you to a higher degree. Compromise and negotiate but protect your business as well.
- Whenever investors ask you to change your business’s business module or structure, do not overreact.
Take some time and consider their proposal with an open mind. Integrate the suggestions which you think will benefit your business in the end. - Similarly, if the investors give constructive criticism, do not get offended. Most of the time, the investors have good experience in the industry or have a history of investing in successful startups. They might be able to help you in a better and creative way.
- Do not think of your investors as incompetent. The investors you will approach will always know a good startup’s characteristics. Invest time in your proposal to convince the investors to invest in your company.
Although starting up a business is a challenge, do not let these obstacles deter you, as you may face multiple rejections and setbacks. Keep on finding new investors every day. You will be surprised how many investors will take an interest in your business and will be willing to invest in it.
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