With the excitement of launching a start-up comes the temptation to jump in too soon. Not only is it vital to spend six months to a year wooing investors and fundraising, but solid commitments are imperative. If you are debuting your start-up prematurely without extensive research and the backing of carefully matched investors and mentors for relevant guidance, your chances of success will decline steeply. So, what are the secrets to startup fundraising?
Plan Ahead
A poorly funded introduction cannot be undone. There is no second chance for a bad intro. The secret to start-up fundraising success is utilizing every aspect of the gearing-up period effectively. Don’t waste time casting too wide of a net for investors, and be sure to have a plan in place before you start sending your pitch deck to everyone you’ve ever met. Every aspect of your fundraising plan must be defined and executed for optimal success.
Develop a Target Investor Profile
Target marketing principles not only apply to customers but to investors as well. Don’t waste precious time courting investors who are either not interested, not available, or not a good fit for your venture. This approach is akin to soliciting door-to-door for a Little League candy bar fundraiser. You end up wasting hours or even days of precious time for a measly profit when you could raise hundreds quickly through social media contacts.
Pursue People Who Care About Your Chosen Field
When developing a pool of potential investors, carefully pursue those who have significant expertise or interest in your “baby.” This strategy is a secret to start-up funding success. Take the time and effort to develop a relationship where you can empathize with the potential investor’s needs and concerns. Be sure to share in-depth knowledge about your start-up in order to spark a connection and develop rapport.
These investors can create “buzz’ since they are enthusiastic about the venture and can be powerful influencers within their social, academic, or business circles. For example, many professors will eagerly invest in a venture related to their specialty.
Although the monetary contribution may be modest, they can be invaluable sources of expert advice, contacts, and help enhance the perception of your venture.
On the other hand, steer clear of would-be investors who don’t understand your start-up and have little interest. These ill-suited investors will be a liability and detract from securing more promising investors. By forming solid relationships with potential investors prior to and after launch, they will also have a chance to see your startup grow and progress over time.
Define Your Venture
Another key factor in start-up funding success will be carefully defining your venture. You will need to categorize your concept using metrics that will add perspective and firmly establish a niche for your enterprise. Without a clear mission, strategy, market plan, and specific quantifiable goals, securing adequate investment will be extremely difficult.
Potential investors will be persuaded by your passion for the venture and your thorough planning for its launch. Your commitment will be obvious when you share comprehensive information verified by research. These tactics are a key secret to start-up fundraising success.
Finally, remember that persistence is vital.
Don’t give up on reluctant investors whom you believe are well-suited to your mission. Numerous entrepreneurial triumphs we can’t imagine living without were rejected at first–in some cases, many times over. Persistence is the true secret to start-up fundraising success.