10 Tips for Raising Capital
Financing rounds are always accompanied by thousands of questions: do all startups need to have capital to grow? At which stage should funding be requested? Keep reading to discover 10 tips for raising funds.
Team: Having a group of professionals with talent, experience and commitment to the business idea is crucial for the success of the startup.
Balance: Many entrepreneurs believe that they need external capital to grow, especially technological startups, which need this push to take off. Relying on that kind of capital can be a weakness. Achieving a balance is very complicated and, to some extent, an art.
Who: It’s really important to reach those investors who are really interested in your sector and stage. In the seed phase it is better to contact accelerators. Investment funds are always advisable if the startup is already defined
When do I ask for funding? The perfect moment to ask for funding is when you don’t need it. That’s when you can negotiate better terms. In early stages is better to raise funds with the famous Friend´s, Family & Fool´s.
What formula? The phase determines the format, but not always. Don´t forget to use alternatives to the traditional ones (business angels, investment funds, Friends, Family, Fools, accelerators…)such as crowdfunding or media for equity.
Should I askl for funding if I have debts? Investors expect the startup to have debts but it´s important that the debts do not incapacitate the startup to continue operating. Some investros can take the risk by negotiating lower valuations.
Should the investor be involved? Entrepreneurs must be the ones who decide what is best for their company. It´s important to be aligned with the investors and hear their advices.
Internationalization: Think and act globally and you will become more attractive to investors who are seeking for scalable projects.
How do I address an investor? Prepare a business plan that justifies the need for funding and expansion. Your plan should include an analysis of the future profitability.
Where could I find my half partner? Accelerators, incubators, investment funds or key encounters of the entrepreneurial ecosystem such as South Summit are great places to find the perfect investors for your startup.
