When it comes to funding your startup, there are a lot of choices. From investors to crowd-funding to incubators and accelerators. The landscape of startup funding can be overwhelming, not to speak of successfully gaining financing once you’ve made your decision on which choice to go with. If you’ve managed to save enough money to self-fund your startup then your choice may be a little more straightforward. However, you still may need a reliable and knowledgeable investor to help build your business.
So how do you improve your chances of getting funding? There are countless investors out there willing and actively searching for startups to invest in, here are eight tips to help you on your way to getting funding.
- Network with the right people
It may seem cliche, but networking with like-minded success-oriented people will help in growing your business significantly. Professional networking can assist in acquiring funding as you’re exposing your business and yourself to others who have found sources of funding as well as investors who may be interested in funding your business.
- Your Expertise and know-how
Not just what you know about your own business, which is a given, but also your knowledge and awareness of your investors business background (whether they be a single investor or a company). Your expertise will also help you when communicating a
reason why funding your business will make business sense for them. For this, you’ll also need to know their current and past investment portfolio and be able to identify the similarities between your business and their previous successful investments.
You, of course, should know who your competitors are, your customers, and have a plan on how you will differentiate yourself and beat your competitors. An investor, be it an individual, many people (through crowdfunding) or financial institution will want to see you demonstrate an in-depth knowledge of your business and industry, not just an overall vision.
3.Showcase your success
Yes, your business is small, and it may not have an extensive past, but success doesn’t necessarily refer to larger than life profits. Positive reviews from customers and partnerships in the past can be enough of a showing of initial success that could translate into the potential for growth. Highlight the strengths of team members, the skills available. All of this will present your business as stable, with a strong team and relationships; all of which are resources.
Showcasing your commitment to your business vision is a crucial factor in gaining funding. All investors will want to see commitment and proof of it before investing in a startup; if they’re to risk money on your business, they’ll need to see a track record that demonstrates you’ll give your utmost to make the company a success. It’s an exercise in belief; demonstrating your commitment will help to gain an investors belief and of course, funding.
Showing how you initially financed your business with your funds is a good start, as this shows a willingness to sacrifice your own money. Presenting the journey you’ve been through with the company and how you’ve overcome each of these hurdles. This is an excellent way of demonstrating your dedication to the company, and your commitment having paid off. Individual investors especially can relate to the challenges faced by businesses, so this can help to foster a relationship.
5. Get advanced assurance or Government Grants
If you’d like to attract more significant amounts of investment and make your business more attractive to investors as a whole, and you’re issuing shares. Provided you’re based in the UK; you can apply for assurance from HMRC so that shares you issue have SEIS or EIS eligibility; providing tax relief for your investors. SEIS and EIS tax relief are incentives that were introduced to encourage UK taxpayers to make seed investments in early-stage companies. This is an excellent way to make your business more attractive to investors as other companies they’re considering may not have this. It also show’s a level of planning and foresight, that will be seen as an asset.
Similar schemes can be accessed in various regions, at times in the form of Grants directly paid to startups; for example the EU funding programme.
6. Showcase your Uniqueness
Startups tend to spark off new trends, that’s the beauty of them; innovations and technology are often sparked within startup environments.
Celebrate this uniqueness and the innovative nature of your business. This gives an investor a reason for funding your business, as they’ll be able to take part and share responsibility for the building of a new trend or innovation. Convince investors that they are at looking at the beginning of a business revolution and have a potential to be part of it.
7. Communicate your plan
This is a must. You may be able to show passion and determination for your business, but this will all go to waste without the ability to demonstrate a carefully crafted and well thought out plan. A business plan is a must-have, and without one your business will lack credibility, and you will come across as an amateur.
There is no set template for a business plan, but it should outline your business goals, target market, profit projections, costs and a detailed layout of the industry. Once you have delivered your pitch, it’s your business plan that will be reviewed multiple times before any funding decision is made.
Would you want to work with someone you don’t like?
Knowing every detail of your business is vital, as well as selling your company as a whole, but funding a company is only the beginning of a long-term relationship with an investor. It’s important to make a positive impression and help investors believe working with you long term will be a positive experience.
This starts with the basics of dressing smartly and in line with your business industry as well as portraying confidence in yourself and your business.
Be likeable as a business associate, show your commitment and ability to inspire others as this is a great selling tool and will help to gain their confidence in you and your business.
You will have rehearsed your pitch extensively but once this you have, deliver it naturally and not as a script. When pitching and during follow-up meetings, there's an opportunity to sell yourself as knowledgeable and personable.
Implementing some, if not all, of the tips above, will help you to find and secure funding. The success of gaining financing is exciting, and things can move quite quickly. However, it’s important to make sure your ideals and goals for your business align with the funding source you choose. Remember raising money is just one of the many challenges you’ll face while growing your business, so ensuring your funding is on sound footing from the outset is vital.
Tosin is a marketing specialist and Founder of Marketbl the first startup marketing platform, based in the UK. A former Web and App developer, when she's not helping startups grow, she's tinkering with tech.