8 rules if you want to increase investment in your start-up | Jobs Recent

Head vice-president of Softline.

Our venture capital firm’s analysts receive 10-15 cover letters every day, which adds up to thousands of letters a year. Over 30% of these startups are at the wrong stage of development to apply for funding, and 40% come from sectors in which we do not invest. These numbers clearly indicate the continuing need for investment sourcing guidelines, despite the wealth of material that is already there.

So, if you’re looking to source investment for your startup, here’s a checklist of the most important points to consider.

1. Determine if VC is the way to go

Venture investments aren’t the only option when it comes to funding, so the first thing to do is understand if your startup is a good fit for VC. If you don’t want investors to be involved in the company’s decision-making process, venture finance isn’t for you.

2. Know who you are addressing

If you decide to look for venture capitalists, you must do the initial work of identifying investors and their funds. Before you click “Submit”, read the fund’s website and business media to find information about VCs, such as the sectors they invest in, which funding tiers they prefer, and what their average check size is.

3. Find a mutually beneficial match

Look for win-win proposals. Study an investor’s portfolio to see if they have any stocks that are synergistic with yours. If your own solution can be integrated with any technology stack that is already in the portfolio, pay attention to it.

4. Seek funds before you need them

Remember that all these things take time and cannot and should not be done on the spur of the moment. And these are just the initial steps you need to take before applying for funding. A funding round is rarely a quick affair. Never start collecting investments when you are short of cash; always do it six months in advance.

5. Make a good first impression

Your written presentation is an investor’s first impression of you. Don’t spoil this opportunity.

A good template to organize your presentation is the Sequoia Capital Pitch Deck template. And if you haven’t already, check out Guy Kawasaki’s 10-20-30 rule for PowerPoint presentations.

Remember that the presentation of the product does not equal the presentation of the investment. Investors don’t need to see a 40-slide, 10-point set of fonts describing the intricacies of your product and all the usual notes about “patent pending” and so on. They want to see a clear business plan, team description, schedule, amount you are asking for and how you plan to spend it.

Remember that your presentation can and will travel from investor to investor without an initiation letter attached, so contact information in the presentation is essential. Our analysts once received a presentation with no contact information and had to search through the personal email addresses of the founders until they finally found them via Medium posts. It was a commendable exception, not the rule – and it definitely took away some of the shine from the start-up team in the eyes of the fund.

6. Ace Personal presentation

Your personal presentation is also essential. Even if investors liked the written presentation, things can go wrong quickly if the following pitfalls are not avoided:

  • Late responses to requests for additional information and attempts to arrange an appointment. Make sure you respond to all requests promptly.
  • Being late for a meeting. This can be forgiven if everything else you do and present is perfect and investors are genuinely interested in your project, but the rule of thumb in communicating with investors (or anyone else for that matter) should be punctuality.
  • Lack of knowledge about the market/competitors. You should know everything about your competitors, whether they are already established or just developing. You should always keep an eye on new, larger markets and be able to discuss them in a meeting.
  • Refusal to present the team to investors. Every value-for-money investor knows that the right team is the key to the success of any project. If you’re hesitant to show your team and talk about the values ​​that hold them together, that will be a big red flag that could haunt you during your due diligence process.

7. Proactive follow-up

The presentations are followed by the continuation. This is the time to be proactive.

Don’t be afraid to remind investors about yourself. This is no time for false modesty.

If there are any changes to your company or product, write about them. Follow-up is also a great opportunity to share any articles about your startup that have appeared in the media or comments you or your colleagues have made on relevant topics.

Remember that refusal of funding is not final and irreversible. Even if you do not receive funding, you can ask the investor for referrals and recommendations or propose a pilot project.

8. Avoid the pitfalls of the final episode

Follow-up is followed by due diligence by the investor. Even though this is the final episode, there are also pitfalls to avoid:

  • An attempt to “fake” numbers and hide inconvenient facts. If your numbers are weak at the moment, but you’ve done your homework, have a well-thought-out business plan and clear KPIs, your honesty in dealing with investors will be a much better foundation for a possible future partnership.
  • Team conflicts. Conflicts can arise from poorly defined co-founder roles or competing visions of the company’s future. Either way, these things are a no-no for most investors.
  • If your startup is already involved in some kind of litigation, this is a big red flag for investors. Whether it’s a copyright or patent conflict, legal action from first-time dissatisfied customers, or anything else, resolve these issues before you head to VC.

Honesty and openness are the foundation of any good relationship, including investor relations, whether during financing negotiations or later. Keep that in mind, and your funding process could prove to be a smooth sailing through the turbulent waters of the current economy.

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