Every entrepreneur works hard to create a business plan around a unique idea that they think will be a good business. With the right combination of skills, experience, and mindset, aspiring startup founders will be able to come up with a potentially successful business.
The next step is to bring this plan to life, and this starts with funding. A Harvard Business Review article by Paul Gompers, Will Gornall, Steven N. Kaplan, and Ilya A. Strabulaev (2021) stated, “Even for entrepreneurs who do gain access to a VC, the odds of securing funding are exceedingly low. Our survey found that for each deal a VC firm eventually closes, the firm considers, on average, 101 opportunities.”
Because of the stiff competition and other factors, entrepreneurs need to improve their approach to finding investors. Here are some tips on how to successfully secure funding.
- Establish Strong Evidence in Favor of You
Research is a fundamental element of creating a business plan, which is why aspiring startup owners should put more effort into looking for more information about the products or services they are planning to offer, the target market, and other insights about the prospective business.
This step is essential because it is a way of proving the feasibility of the proposal. Entrepreneurs should remember that their passion for the idea may not be enough to attract investors. They need to see solid enough evidence that their investment will be worth it.
Surveys, industry experts, and ground research can say a lot about the potential of the business. Studies from established research groups are also great resources. The key is to find the right balance between groundwork and citing studies to create a persuasive proposal.
- Outline What You Have to Offer
Aside from showing the strengths and potentials of the proposal, it is also important to tell investors what they can gain from investing in the future business. Remember, they are not giving away their money for free.
Instead, they want to make sure that it goes toward something that can help them achieve certain goals like helping specific communities, participating in forward-looking endeavors, and making more money.
When these investors funnel funds, they are often given stocks that can help them earn their money back and more. Startup founders should provide this option, as well. Stocks that pay dividends are a desirable offer, along with long-term equity.
Having a plan on how the business will come up with results is a great way. While a business model is one of the best ways to do this, it is also important to include marketing strategies and plans to find a repeatable and scalable model.
- See it in Investors’ Perspective
All these strategizing can make entrepreneurs feel more confident about presenting their proposals to potential investors. While this is a good thing, it is important to take a more difficult, but surer route by trying to predict their reactions.
Aspirants should think of what objections, concerns, or criticisms investors may have upon hearing the presentation. This way, they can reevaluate the merits of bringing up such issues and once they find that the potential critiques are reasonable, they can make the necessary amendments.
They can also come up with counterpoints to assure funders that measures have been taken so that these concerns are no longer an issue.
- Expand Your Network
Before going to investors to present proposals, entrepreneurs should be able to “softly” introduce their idea through their network. Networking is a proven and tested way to introduce the company or brand to the market, as well as to competitors and potential investors.
In short, creating and widening the network can help ensure that players in the industry are aware of the business. This is a great way to meet people such as experts, potential partners, and prospective investors.
Soft-selling through networking opens opportunities to pitch the proposal to the right people. In fact, soft pitches can transform into a contract with funders, as long as aspirants do it properly.
- Focus on a Single Investor
While having an expansive network is desirable when looking for funding, entrepreneurs should realize that the best way to start is to target a single funder that fits their profile. Take note that investors such as venture capitalists see hundreds of proposals and many of them fail to strike a deal.
This failure can be attributed to a lack in terms of the presentation itself, lack of research, lack of potential, or simply lack of alignment with the investor.
It is important to find a single seed funder that has history of supporting businesses and endeavors with similar businesses. This increases the chances of the proposal being picked, simply because it falls under the interest of the investor.
However, the plan should be highly focused on the potential funder. A lot of thought should go into customizing the proposal to capture their attention and make them see how funding the business connects with them.
- Polish the Presentation Accordingly
Above, entrepreneurs are advised on how to curate the content of their business plan in order to make it desirable for investors. However, it is important to remember that presentation matters.
The idea may be good and the research may be solid, but an uninteresting pitch can lead to failure. Keep in mind that investors will not be able to see the potential of the proposal if it is not captivating enough to pique their interest.
Visuals play a big role in ensuring that funders’ eyes are on the presentation the whole time. Images, clips, and other similar elements can help secure their attention. Minimal text can work, as well. However, it is important not to overdo the use of these elements as they can overwhelm the audience.
While visual creativity is always welcome, aspirants should not neglect to polish their presentation skills.
Becoming a successful startup founder can be within reach, but only if entrepreneurs find an investor willing to fund their potential business. With these tips, aspirants can increase their chances of landing a funding deal.
- Gompers, P., Gornall, W., Kaplan, S.N., & Strebulaev, I.A. (2021). How Venture Capitalists Make Decisions. Retrieved from – https://hbr.org/2021/03/how-venture-capitalists-make-decisions