A startup is a dream which becomes real, and physical with the efforts of the entrepreneur. But that dream also needs nourishment and fuel to survive, and there comes a point when funding becomes the most crucial aspect for surviving the next day.
Although not all startups needs external funding, but yes, most of them do. In a recent survey in US, it was found that 34% of all small scale businesses admitted that raising cash was their biggest problem.
Here are three super-efficient ways to discover the right investor for your business:
- Create a Product Which Attracts Investors: The Law of Attraction
Sanjeev Bickchandani, founder of InfoEdge which created Naukri.com has an interesting story regarding his investment in Zomato. He used Zomato’s service for 6-7 months, liked their concept of including menus in their app, and then one fine day, he himself searched the email id of Deepinder Goyal, founder of Zomato, and said that he wants to invest in his idea.
The same happened with Sachin Bansal, co-founder of Flipkart and his investment in News in Shorts app. He himself used their app to read news stories, and then one fine day, he approached them for investing in their product.
Hence, it is always a good idea to bootstrap your startup, and bring paying customers on-board before expecting investors.
The Law of Attraction, which is the foundation of Content Marketing principles and lots of other marketing techniques, is the basis for attracting the right investor as well. As your product gains traction, gains subscribers and users, the right investor will himself/herself approach you with their money.
Experienced investor and grand daddy of startups, Paul Graham has famously talked about your first 1000 users: As soon as you get them, magic starts to happen. But those 1000 users should be your customers, who are ready to pay for your product, your idea. If you have that, then investors are bound to come to you, pleading to invest.
Probably, this is the only mantra for a successfully funded startup: The investor comes to you, rather than you going after them.
- Create a solid pitch deck
A pitch deck is a presentation or a video which describes your startup. And for an entrepreneur, this should be the most important presentation he has ever made.
A great pitch deck should basically have these components: what does your business do, and for whom, what is the biggest problem it is addressing, how are you going to solve that problem, your business proposition, how does your business work, data about the market size, go to market strategy, financial modeling, cash flow idea, revenue projections, monetization strategies, SWOT analysis (Strength, Weakness, Opportunities and Threats), and description of your team (co-founders, employees)
The components of this pitch should be remembered by heart, and it should come out naturally while giving a presentation.
Another crucial tip: Emphasis on the tone of the pitch deck: It shouldn’t be boring, while it shouldn’t be arrogant and over-confident. The entrepreneur is seeking money, but again, the tone shouldn’t be such that it creates an impression of desperation and helplessness.
The pitch deck should honest, to the point, and without fluff; besides having a neutral tone, with lots of confidence and belief in the idea.
Here is a great template for pitching your startup in-front of potential investors, created by Games2Win founder Alok Kejriwal. This can work as a reference point for your subsequent pitches.
- Networking, Socializing & Being Shameless
There are tons of business accelerators, incubators, angel networks, and fund raising platforms available in the country, which are actively seeking brilliant ideas, startups and a solid team. But then, where is the gap?
The gap lies in connection, in awareness and information.
And this gap can be bridged by networking, socializing and by being shameless.
There is no one called an ‘introvert’ entrepreneur, because selling is the most crucial task for him/her. Be it any business – tech or non-tech, FMCG or food, services or product, it is selling for surviving. And in order to sell, you need to become shameless; you need to absorb rejections and use them as your foundation.
For a startup looking for funds, it is highly advisable that their founders (and not just employees) travel, attend various networking events, talk with investors, people who know investors, and continuously pitch their ideas and plans.
However, one thing to keep in mind: In the rush to attend networking events and socializing, the entrepreneur shouldn’t forget the #1 rule of discovering investors which we mentioned here: Making the product robust, and increasing user-base at an incredible pace.
Time management becomes very important here, as the founders need to allocate time accordingly for these external events, after ensuring that their main business is not hampered or they are not neglecting the core operations.
The rule of the thumb when it comes to funding from external sources: Funding is not the reason your business was born.. Funding is only a stepping stone towards expansion. The entrepreneur, who is able to understand this fact, is the real winner!