In this section, we discuss issues, practical tools, business modelling & identifying business opportunities to improve your funding profile and becoming attractive to funders. We call it the Business Journey (How-Tos).
In the beginning, when you sit down in front of or commence preliminary conversations with an external funder or investor, what do these funders/investors, look out for? Whether you target VCs, PEs, Angels, banks or bi & multi-lateral organisations…here are a few of the crucial criteria required for them to take interest in your business.
- Alignment — The proposed project, plan or transaction is strongly aligned with their funding areas, requirements and priorities.
- Viability — Sufficient financial & resource support exists to ensure the request or opportunity will be implemented and continued after the injection of funds. Funders seek a clear exit from funding transactions & arrangements, where money with interest/coupon/dividend etc gets paid, while still affordable to the borrower.
- Capacity — Effective leadership, strong (or potential) financial health, and appropriate knowledge exist to effectively utilise the requested funding. Funders can look at you physically or listen to your voice, your line of thinking, level of reasoning and determine if this signifies the capacity to handle funding.
- Impact — The injection of funding will have a significant impact on the specified area of business or the transaction. Funding applications should demonstrate strategic, potentially high impact and a clear evaluation plan with specific measurable results that will be reported as and when due.
- Performance — The transaction or business need is practical and executable, aggressively researched, pre-tested and accurately projected.
- Risk profile – There has to be a “fit” between the potential risk of the business or transaction and the risk profile of the funders.
- Integrity & profile of especially of Promoter/Founder/CEO – We can refer to a comment from one of our feature blog articles. In the $42-million round for SWVL, funders Vostok New Ventures, as per its latest financial report described the startup’s CEO Mostafa Kandil as an entrepreneur of “very high quality”.
When you initiate contact with your potential funders at any stage in the life cycle of your business, what do you they think of you and your company?
Referenced Article: https://www.inc.com/larry-kim/how-this-pitch-deck-raised-66-million-in-vc-funding.html
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