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HOW TO RAISE EQUITY FUNDING?
The entrepreneur must be willing to put in the effort and have the patience that a successful fund-raising round requires. The fund-raising process can be broken down into the following steps:
Assessing Need for Funding:
The startup needs to assess why the funding is required, and the right amount to be raised. The startup should develop a milestone-based plan with clear timelines regarding what the startup wishes to do in the next 2, 4, and 10 years. A financial forecast is a carefully constructed projection of company development over a given time period, taking into consideration projected sales data, as well as market and economic indicators. The cost of Production, Prototype Development, Research, Manufacturing etc should be planned well. Basis this, the startup can decide what the next round of investment will be for.
Assessing Investment Readiness:
While it is important to identify your requirement of funding, it is also equally important to understand if your startup is ready to raise funds. Any investor will take you seriously if they are convinced about your revenue projections and their returns. Investors are generally looking for the following in potential investee startups:
Revenue growth and market position
Favourable return on investment
Time to break-even and profitability
Uniqueness of the startup and competitive advantage
The entrepreneurs’ vision and future plans
Reliable, passionate, and talented team
Preparation of Pitchdeck:
A pitchdeck is a detailed presentation about the startup outlining all important aspects about the startup. Here is what you need to include in your pitchdeck
Investor Targeting:
To target the right set of investors, it is necessary to research their past investments in the market and speak with entrepreneurs who have successfully raised equity funding. This exercise will help you:
Identify active investors
Their sector preferences
Geographic location
Average ticket size of funding and
Level of engagement and mentorship provided to investee startups
Pitching events offer a good opportunity to interact with potential investors in-person. Pitchdecks can be shared with Angel Networks and VCs on their contact email IDs. Response time can be easily more than a month – rejection communication is not typically shared.
Due Diligence by Interested Investors
Angel networks and VCs conduct a thorough due diligence of the startup before finalizing any equity deal. They look at the startup’s past financial decisions and the team’s credentials as well as background. This is done to ensure that the startup’s claims regarding the growth and market numbers can be verified as well as to ensure that the investor is able to identify any objectionable activities beforehand. If the due diligence is a success, the funding is finalized and completed on mutually agreeable terms
HOW TO RAISE EQUITY FUNDING?
The entrepreneur must be willing to put in the effort and have the patience that a successful fund-raising round requires. The fund-raising process can be broken down into the following steps:
Assessing Need for Funding:
The startup needs to assess why the funding is required, and the right amount to be raised. The startup should develop a milestone-based plan with clear timelines regarding what the startup wishes to do in the next 2, 4, and 10 years. A financial forecast is a carefully constructed projection of company development over a given time period, taking into consideration projected sales data, as well as market and economic indicators. The cost of Production, Prototype Development, Research, Manufacturing etc should be planned well. Basis this, the startup can decide what the next round of investment will be for.
Assessing Investment Readiness:
While it is important to identify your requirement of funding, it is also equally important to understand if your startup is ready to raise funds. Any investor will take you seriously if they are convinced about your revenue projections and their returns. Investors are generally looking for the following in potential investee startups:
Revenue growth and market position
Favourable return on investment
Time to break-even and profitability
Uniqueness of the startup and competitive advantage
The entrepreneurs’ vision and future plans
Reliable, passionate, and talented team
Preparation of Pitchdeck:
A pitchdeck is a detailed presentation about the startup outlining all important aspects about the startup. Here is what you need to include in your pitchdeck
Investor Targeting:
To target the right set of investors, it is necessary to research their past investments in the market and speak with entrepreneurs who have successfully raised equity funding. This exercise will help you:
Identify active investors
Their sector preferences
Geographic location
Average ticket size of funding and
Level of engagement and mentorship provided to investee startups
Pitching events offer a good opportunity to interact with potential investors in-person. Pitchdecks can be shared with Angel Networks and VCs on their contact email IDs. Response time can be easily more than a month – rejection communication is not typically shared.
Due Diligence by Interested Investors
Angel networks and VCs conduct a thorough due diligence of the startup before finalizing any equity deal. They look at the startup’s past financial decisions and the team’s credentials as well as background. This is done to ensure that the startup’s claims regarding the growth and market numbers can be verified as well as to ensure that the investor is able to identify any objectionable activities beforehand. If the due diligence is a success, the funding is finalized and completed on mutually agreeable terms