Anyone who’s ever tried to launch their own startup knows a thing or two about just how difficult and strenuous fund raising can be. But the main reason why most people fail to raise the venture capital their startup needs is because of insufficient preparation beforehand. Following, we would like to present you with a list we have compiled of the top things to consider when raising venture capital that should help you understand what you need to do in order to ensure success. Read below to find out the top things anyone looking to fund their startup should know. Let’s take a look at the countdown.
No. 4: Consider the potential of your startup
Startups, regardless of their particular field, always represent somewhat of a risky investment. This is why, in order to attract people willing to pour money into your business idea, you really have to ensure that your startup shows potential. Is your idea scalable, patentable, and sustainable? Is your concept solid and likely to work in the long run? These are all things you have to take into account, as they can show your investors that you mean business and that they’ll have a real chance of scoring a profit once your startup takes off.
No. 3: Learn the lingo
Like any other financial endeavor, raising venture capital is a process filled with notions, concepts, and terms that may be difficult to grasp at first, in the absence of any economic background. In order to ensure that you know what you’re doing, take the time to familiarize yourself with the field of venture capital. Learn about pre-money and post-money valuation, convertible debts, capped and uncapped notes, stock, liquidations, and pro-rata rights. This knowledge will help you navigate the treacherous waters of raising venture capital.
No. 2: Does your startup need venture capital?
Truth of the matter is that not all startups will require funding. And, in many cases, if you can do it without raising venture capital, it is a much better option. In this way, you’ll have complete control over your company and you’ll be in charge with all of the decisions. Venture capital may seem like the preferred route for the vast majority of startup founders, but if you don’t really need, you’d be better off doing things on your own.
No. 1: Is your industry likely to draw in investors?
The most important thing any entrepreneur should realize is that not all types of startups are adequate for fund raising. This is the main reason why some industries have an intense startup activity while others do not. A technology startup is far more likely to draw attention than for example, a real estate one. Retailers, manufacturers, or hospitality startups also fall into the latter category. Software, online, or technology startups on the other hand, are going to make it a lot easier for you to attract investors and raise the funds you need.
