Sooner or one day you may come up with an idea to get some investment in your start-up. There are 3 most important questions you need to consider before taking any action. Literally consider and think over because involving somebody’s money in your business is not something that will only help you however can significantly modify your company and business in general.
So what are the questions? Here they come:
- What is your funding strategy?
- What are you willing to give up?
- What are the sources of capital to consider?
What is your funding strategy?
Think of what you are looking for: investment, loan, debt, equity or mix? Are you able to generate returns? Everything given to you must be returned one day and that’s the law of lending. You have to give back. Think in advance how will you pay back the money. Also one of the important points here is to understand clearly that equity investors (those giving money for % of company ownership) will also look for return on their investments and question you where their money was spent.
What are you willing to give up?
If you are willing to let go of ownership, i.e if you are willing to allow investors to fund your business growth, what percentage of ownership are you willing to let go?
Does the possible valuation of your business match this percentage that you are willing to let go? Think on how satisfied you are with this idea. Please attempt to think about what you are willing to let go; your thoughts on the above this will determine the way you Negotiate and impact Deal Terms – Some of these may well become Deal Issues or Post Deal Issues, so do think through with care. My point here is that your business and your company is your kid in that sense and making right decision is vital.
What are the sources of capital to consider?
There are numerous sources of capital and if after reading the previous two paragraphs you think I’m against investment and start-up funding, think again! If you go for it, do it in a wise way so that your company doesn’t suffer. There are ways to get cash flow and we will discuss these options during our webinar.
We will find out in which cases to consider network force and family/friends as potential investors. You will learn what Braintree, TechSmith, Envato, AnswerLab, Litmus, iData, BigCommerce, and Campaign Monitor have in common. You will find out what type of investment companies need to typically go through stages: seed money and customer-funded money.
Learn the below in detail!
If you decide to apply for funding after you have considered these three questions, there is another important point to keep in mind: how can you persuade the investors to invest in your business?
Do you speak the same language the investors talk?
Remember the “10/20/30 rule of PowerPoint”—10 slides, 20 minutes and no font smaller than 30 points.
Are you aware to avoid making statements commonly heard by all investors, such as, “If we get one percent of the total market we will be successful” or “We will have first-mover advantage.” ?
You will come to know it and also get a script!
Tune in and be ready!