Important steps for raising Seed Capital for your business

I am a startup and I need money. Should I use my own savings or ask from family and friends? Should I seek funding from investors or let my business gradually finance itself through its own revenues? My ultimate goal is to grow my business but I don’t have enough money and cash.

Now what do I do?

The concept of seed funding has gained prominence lately and there are multiple funding options available for startups like crowdfunding, bootstrapping, venture capital, loans and grants.

Seed funding can help you for starting your business and for that the entrepreneur needs to approach an angel investor; however, for some entrepreneurs it might be a little overwhelming task. Seeking seed funding has its challenges associated with it so it is important to do thorough research and prepare before approaching for seed funding.

How to get Prepared for raising Seed Capital

The primary objective of a seed capital investor is to help the founder to develop and grow the business by making a one-time or regular investment in the form of loan, convertible debt or equity ownership. Raising funds on the basis of idea or the product or service in the development phase is a challenging task. The persistence and passion of the founders can convince the seed capital investor to invest in their business.

• Create a good business profile

Investors want to be sure that the money they are investing will be safe and generate good returns. They would want their money to be invested in the right business so that their hard-owned money is not wasted. As an intrapreneur you need to build a strong profile that shows the strength of your business idea, your business plan, your team, and future prospects. To catch investors’ attention your pitch deck should reflect how good your idea and business plan actually is. A professional pitch deck shows a lot about you as a founder and how much thought, time and effort you have put into the business.

• Attend investors and pitching events

To attract investors, you should attend investors events for startups where investors are actively looking for the next business to invest in. Such events are frequently organized whereby entrepreneurs get the chance to showcase their business plan and meet up with investors face-to-face. Attending such events helps in making business connections and networking. On top of that, you also get to know about current business trends and meet other entrepreneurs as well.

• The power of connections

It’s not an easy to find angel investors who are very keen to listen to your business plan. Finding a seed fund investor directly could be tough because so many of them keep a low profile to avoid constant hassling. Sending a cold call via e-mail, LinkedIn etc. might not always work.
It is always better to be referred by a third party or a consultant to a seed fund investor

• Approach angel investors in your niche

Obviously, it doesn’t make any sense if an entrepreneur in the hospitality industry approaches investors experienced in the health care sector. Angel investors, usually have expertise in specific industries, and understand your business idea or well as per their niche. Moreover, they have network with other investors of the same sector who can help your business expand and grow in the long run.

• Show them how successful your past business ventures were

You should exhibit successful record of your previous venture(s) which can persuade investors to consider your business plan and come on board to invest their capital in your business. No investor wants to get their money wasted and have zero or negative returns on their capital invested. The success of the past records will make investors believe that you can nurture your startup once the adequate funding is provided.

• You’ve got to know the numbers involved

Before pitching your business idea to investors, you need to be fully informed about the numbers involved. Make clear estimation about your gross profits, profit margins, projected cash flow, revenues, income, and financial position of your business. Angel investors thoroughly check such numbers before making any decision. If you’re well prepared beforehand, the chances of turning down your offer or business plan is less.

• Avoid inaccurate info and miscommunication

Your business plan should be realistic. Instead of overestimating you must show accurate facts and real statistics of the business. It builds the credibility in the eyes of investors. Investors want to know the factual and correct position of the business for the purpose of valuation of your business and decide whether to invest or not. Trust and transparency are the core principles of building a healthy relationship with the investor. To attract investor’s attention, it is important to be honest and truthful while telling your business story in order.

• Make it a priority to do proper research

If it is your first time to the startup world, you need to do proper and thorough market research about your target audience and their needs and preferences. You just cannot present a vague idea to investors and believing that it will work.  Angel investors have been funding startups for years, and they know their business. A proper research and the knowledge that you have put in your plan will give them confidence to invest in your business.

• Stay confident

Present your business idea with full confidence to the angel investor. Your way of presentation should make the point that how passionate you are for your idea, how you will market your product or service, and how the business will result in higher profits. Investor must realize that the founders are complete sincerity for their startup. And only then the investors will be tempted to invest in your business. At the end of the day both investors and entrepreneurs have their respective obligations to fulfill.

Finding an investor for your startup requires lots of dedication, time, and effort. By following the steps mentioned above and having a strong business plan will be helpful in achieving your goals and getting funded by angel investors successfully.