Some entrepreneurs still believe in a popular myth existed before couple of years about how to get startup funding. It is like this. A fairly good product idea, an eye catching PPT, few exorbitant numbers and charts will convince an investor to pledge money on any startup. Well this not at all the case in today’s startup world. While the above category of entrepreneurs are smart and brainy, they forget one basic reasoning.The investors are too good in their own respective domain which is investing and making sure that their money grow. They know to identify worthy ventures from a large lot.
So if you are an entrepreneur looking to get your startup funding for the next phase ask yourself few questions. Is your business good enough to generate an interest to an angel investor? Do you have enough points in your business plan that they have been looking for? Start thinking about this from an investors perspective. If you had invested in a stock or real estate you might be familiar with the ways you analysed the fundamental potential of your investment. The same applies to your startup too in the eye of an investor.
Take some time to review your pitch and product with the following points. If your strategy covers them you are a lot near to your dream of getting an investor who trust in you.
Do you have a product that solves a real market need and has a large potential market?
See if you can include convincing point in your pitch on how your product solves a real problem in the market. How big was the problem and how effective is your solution. How much value does the solution provide to the target customer. Try to build a catching story around it. This makes more sense for an investor than fancy numbers and keywords like ‘disruptive’,’game changer’ etc.
Do you have a solid team that is capable of executing the plan?
The initial journey of a startup is a bumpy wild ride fuelled by dreams, hopes, passion and ambition. The stability of this ride and the chance that it reaches the destination is decided not by the idea or target alone. The presence of a strong team and right mix of people who have the capability and discipline to execute the plan to reach the target is very important. So make sure that you have a good team and you give due importance to showcase your team in your pitch for startup funding.
Do you have a convincing strategy against powerful competition?
Once your idea reaches the market and it start to show signs of progress this point will become most important. You will get stiff competition from existing competitors or solid companies trying to enter and seize the opportunity. An investor will be interested in your strategy to defend this entry barrier. It can be a good sales strategy or unique formula that is not easy to replicate or legal patent protection. Either way a convincing to tackle this problem adds value to your pitch presentation.
Do you have a business model that can scale up to grow fast?
Now that you have a convincing solution a team and a strategy to defend the competition this will be the next main area of concern. What is your plan to handle the growth. It is not about adding one or two more people or customers. How can you handle a tremendous (exponential) increase in customers or sales without breaking the business or proportionally increasing your infrastructure. Do you have a plan for your product and team to handle the quick expansion in the load. Many business lose track and derail not because of the lack of niche but due to the lack of a strategy to handle growth. So this point is important to get your startup funding.
Do you have an exit strategy for the investors in your business plan?
If everything else is fine, this might be one main point an investor look for before finalising his decision. An investor makes money not at the the time of entry but while he exits from the deal. An exit strategy can give indication on how soon and what big a chance he will get to sell his stakes to a bigger company or an investor if he invest in your startup. You as the founder might have an emotional attachment to your product and might need to stay with it for a long time. But for an investor an exit is important. So make sure that your pitch covers this point too.
Even if all these points are covered, it still might not ensure a 100% chance for you to get startup funding from every angel investor. Their are many other factors like personal choice, individual liking, location, industry etc. However ensuring that you have a solid plan for the above five will cover most important points for an investor. That will increase your chance many fold to get startup funding as well.