If you are looking to raise funds for your start-up, you need to always become investment ready and prepared for potential investor meetings. Your business plan and strategic goals all play a significant role in the success of your fundraising efforts. Many start-up founders do not agree that they are prepared for investors; instead, they are eager to start the deep dive conversations with investors and end up getting stuck there.
One of the most common reasons why entrepreneurs fail to secure financing and get their start-ups off the ground is that they often approach investors unprepared. There are currently several entrepreneurs, and the number will keep growing, and they all require funding. Investors have regular pitch meetings with entrepreneurs virtually every day, so you can’t afford to show up unprepared and risk losing the investment.
If you’re an entrepreneur seeking to raise funds, you’ll need to build your company, figure out which details certain investors would want to see, and then present those details in a clear, compelling way. Remember that many investors place a high priority on maximizing return and minimizing risk. The investors you meet will expect you to present them with information on your business model, substantial financial data, talent, projected terms, and expenditure plans.
Here are pointers for entrepreneurs who wish to embark on this investor readiness journey.
1. Formulate and clearly articulate a compelling narrative for your business.
Spend time questioning and defining your end goal in order to make it clearer and more easily articulated. Think about the problem you’re solving and what gives your product an advantage, and make sure you fully understand the reason behind every decision and path you choose.
Have a concrete business plan and model that would work as a roadmap showing investors where your company is headed. Also, make sure that you are clear on what you intend to achieve by taking on investments.
2. Identify your market and ideal customer base.
Devote time and resources to researching your potential buyers and their willingness to pay for what you are offering. Outline your target markets, market size, demographics, and growth prospects and include them in your pitch. Accumulate data to follow your story. If you haven’t launched yet, show that you’re aware of any barriers to entry and detail how you plan to overcome them. If you can, outline why you’re better than your competitors.
3. Prepare an accurate financial model and financial projections.
Show your financial records and demonstrate viability with ways such as market tests, web traffic, or sign-ups; this will validate that there’s a product-market fit. If you have been trading, you need to get everything related to that in one place—a data room. That might include previous quarters’ trading history, your balance sheet, and cash-flow reports. Your financial projections should reflect a realistic picture of your company’s capabilities and also include a clear idea of the valuation of the business, the equity available, and a potential exit strategy.
4. Establish an effective team with defined roles and expectations.
The team is the only thing more essential than the product idea. A good investor understands that even the finest ideas might fail due to the shortcomings of the team behind them. With this in mind, you’ll need a team of people behind you, either employees or freelancers, who have a diverse set of skills and responsibilities.
5. Get ready to pitch to investors.
Start preparing to pitch to potential investors. While doing so, think about your target audience and who you are selling your ideas to, and tailor your pitch. During your pitch, be prepared to answer questions regarding the use of funds, your current financials, and your exit goal. Answering these forward-thinking questions will reflect your confidence in the business as well as your ability to plan for it.
Being investment-ready is a minimum requirement if you’re looking to raise money from investors – it’s about backing up the story you tell about your business with evidence.
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