Securing funding for a new startup may always seem impossible, but it is never more difficult than making a sale. The process of Fundraising is not impossible, but it is an obstacle that requires a proper focus, a better belief , better capabilities and efficient strategies to achieve.
This article will tell about several common myths that the entrepreneurs face while looking for investors, and it would also tell as to how to bust them :
- Myth #1: The investors didn’t get the business man’s idea
The Investors are focused on the projects which they understand, but they generally are more importantly focused in the people who they know, like and understand. The First and foremost part is that it is on the businessman to ensure he is speaking with the right investor for himself . An investor needs to clearly understand as to what it is which the businessman is selling in order to invest their money.
The best way to however bust this myth is to learn to articulate what it is it which the businessman does . People often refer to this as an elevator pitch. An elevator pitch helps to describes the pain and the solution which the businessman has created, and it can be articulated in less than a minute. The businessman to Create and practice this before his next round in front of the investors and make sure that his presentation is as clear and precise as his elevator pitch.
- Myth #2: There is so much which a businessman needs to explain to the investors
A businessman may have five minutes to present to an investor, so it is advisable if he gets rid of the 75-page presentation.
The businessman is required to keep the following key questions in his mind:
- Did he clearly spell out the investment which he wanted from them and the return which they would get from him?
- Did he get the questions during or after his presentation? Could he answer them all and if not, did he go back after and provided the answers?
- If the investors said no, did he ask if the deal could be good for anyone else they knew? The world of investors is a tight-knit one, and it is usually the fact that one group knows what another group looks for in a deal.
- Did he take the time to thank the investors for their time?
- Did he take the time to really capture their feedback, and did he follow up?
The businessman must be sure to explain how his product or service is different than anything else out there, and how it creates demand with a market segment, and how the businessman can sell it for more than it costs to produce. For example, the law requires you to obtain a licence like a food licence, import export code . You can easily show that a market for your product exists.
- Myth #3: They said they didn’t understand the consumer
If the businessman’s market base was too large, perhaps he still didn’t demonstrate how to reach everyone in it. If the investors didn’t understand it, it meant that they were not clear, or they have not drilled down to really find the business’s customer.
- Myth #4: There’s no money out there!
Between angel investors, venture capitalists (VCs), traditional borrowing sources (such as banks), government and university grants, and non traditional funding sources (like crowdfunding), there are billions of dollars that are available to fund ideas, startups, NGOs, emerging brands and even successful companies that are looking to grow.
The real issue which is related with this myth is not that there is not funding, butt rather the myth is that people do not know where they must look for the funding.
The Local and state governments, as well as many academic institutions, have resources such as programs supporting entrepreneurship which are available to apply for.
- Myth #5:The investors told me to come back for funding later
If the investors did not like the business idea , they would have told the businessman that they were not interested. Rather, they gave the businessman an open invitation in order to stay connected, to provide updates, share wins or even go back to them for advice. This gives the businessman a golden ticket to another presentation when the challenges which they saw in the businessman and his project are fixed. It is now up to the businessman to execute a plan in order to overcome the obstacle and follow the road map to their checkbook.
With millions of dollars that are being funded daily and billions of dollars which are transacted annually, there are plenty of resources which are available in order to provide entrepreneurial organizations with the necessities to take off. A golden rule which a person needs to remember is that the investors are investing in a business as much as in a product or service.