6 steps for startups to raise the first investments: to do checklist

Programming

2 months ago

raise capital

Raising capital for your startup is not an easy process, so you should spend time thinking and considering the potential funders. Prepare for an in-depth due diligence process, make sure you have all expected documentation ready and well organized.

Lack of knowledge of what is expected of the due diligence process or being ill prepared can turn off the funders. Have a look at our checklist in order to find the first funder for your business.

1. Prove you are market ready

Startup should be established in some way before looking for investors:

  • It should have major name recognition.
  • It should have a huge social media presence.
  • The prototype should be working and showing signs of traction.
  • It should be market proven.

Startup business model should be well- scanned to be defended when it is required. The less risk a potential investor sees, the more he/she will intend to invest.

2. Decide what you want

what you want

Choosing an investor means a certain commitment level. If you decide to address a funder, the needed expertise and the expectations should be considered. Funder’s recent dealings, provided services, expectations and involvement should be also investigated before getting funded.

3. Acquire investors’ types

Find out and learn funder’s types before choosing an appropriate one. We have prepared their major types breakdown below:

Angel Investors
Who they are What you need to get funded

The private, high net-worth individuals who may want a percentage of return on investment or may ask for partial ownership in the company and a say in management decisions.

  • Increasing sales.

  • Expanding marketing.

  • Hiring more competitive or high-talent employees.

  • Ensuring a solid business foundation within their initial desired audience.

Peer-to-Peer Lending
Who they are What you need to get funded

Funders and small business owners are brought together via an investment website.

  • Extremely good reputation.

  • Legal establishment.

  • Having a team.

  • Prepared business plan.

Venture Capitalists or VC
Who they are What you need to get funded

This type should be used after startup shows a significant amount of revenue. They usually invest a substantial amount of money and gain returns through “carried interest,” or a percentage received as compensation from the profits of a hedge fund or private equity.

  • It is already generating revenue.

  • It has a proven commercial model.

  • It is looking to scale up sales or manufacturing efforts.

4. Assure you understand

Relationship with new funders will be critical to succeeding. Assure the funder type is considered before signing on:

  • The degree, type of funder involvement (taking board seats,mentoring, network opportunities).
  • The other fundings performance. Don’t be afraid of asking for references from other start-ups.
  • The ultimate goal.

Also, you can read: How to find mobile app developers

5. Where to find them

find investor

  • Networking Groups. Groups like TechCombustion and Technori are a good way to start finding. Events for tech businessmen are often hosted in mentioned groups that help meet funders others who can help you to get funded.
  • Incubator Programs. Getting an opportunity to scale your startup with mentioned programs is a plus. This helps receive mentoring at all stages of funding. Programs to check out include Techstars, Y Combinator, Capital Factory.
  • Angel Networks. Silverton Partners or Austin Ventures are the most known angel networks. You should apply and shouldn’t be disappointed if you don’t get the funding. Because there are thousands of others who are looking for those same funders.
  • Online resources. Effective resources where a startup can establish its credibility in order to start looking for funders are AngelList, Microventures, LinkedIn, and Quora Do not hesitate to try out.

6. Craft an elevator pitch

After you have found a potential provider you need to present your business strategy. A solid elevator pitch is critical to achieving your goals. An elevator pitch can be delivered as the one-page business overview and details of succeeding. It will take ideally 60 seconds or less.

Looking for funding can be overwhelming, but this checklist is an ideal place to start. Outlined steps can help find and choose the funders for your startup bootstrapping and growth.

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