Initial Tips to Reaching the Necessary Startup Gold at the End of the Rainbow

Today, new businesses are popping up all over the place, as entrepreneurship is becoming ever more popular. Even though starting your own business can yield numerous benefits, it can also be extremely costly. And, unless you have a family trust fund, odds are you do not have mounds of cash sitting around. Therefore, devising a solid fundraising plan is essential to the livelihood of your startup.

At first glance, raising capital might seem like an easy task. Many people might think “what’s the big deal? All you have to do is ask people for money!” While some get lucky and the money falls into their hands, successfully raising ample capital becomes a job in and of itself for others.

Fine tuning your fundraising skills and polishing your pitch is important. But, there are a number of other things to consider, as well. Here are a handful of tips to consider before you hit the pavement.

Fake it ‘till you make it! A wise person once told me, “fake it ‘till you make it!” This tidbit of advice is very applicable to those raising venture capital. You have this new idea and you are confident it is great. Now, all you have to do is convince a venture capitalist, for example, that investing in your idea will be a smart decision. Before you write your pitch or decide who to target, make sure you fully believe in your idea and are confident in your startup’s potential. According to one Harvard Business School Article, “first-time entrepreneurs have an 18% chance of succeeding.” In addition, serial entrepreneurs are more likely to obtain repeat funding. Thus, if you are a first-timer, poise and a dose of confidence are vital to your success. Remember that you are selling yourself as a business person, not just your ideas.

Picky, picky, picky. Unsurprisingly, venture capitalists are extremely picky when it comes to deciding where to invest their money. If you were in their shoes, you probably would be too. In fact, some venture capitalists were just like you at one point; a dreamer with a great start up idea, longing for capital. According to Maha Ibrahim, a general partner in Cannan Partners, a venture capital firm, “we want to invest in companies that will grow by leaps and bounds over the next five-to-ten years so that it justifies going to the public market or provides an exception nal exit that creates enterprise value.” Venture capitalists know what they want and they are not going to simply hand out money for every concept they hear. Therefore, do your homework and diligently research the market and your potential investors prior to reaching out for funding. Investors have individual philosophies in terms of what point in the overall startup process they will invest. For example, some venture capitalists like to come in at the very beginning while others like enter in later in the game. Thus, be sure to ask around and hit the books to gleam the maximum information available. If you and a certain venture capitalist do not seem to have synergy on paper, odds are you probably will not in person.

You only have one shot. Make it count! With your game face on and your target venture capitalists selected, it is time to create your pitch. Whether you use a PowerPoint presentation or plan to present your target venture capitalists with extensive sample products, your entire proposal pitch needs to be bullet proof. Make sure that you cover all your bases and take caution that your content is not all “rainbows and sunshine.” With their money on the line, any smart venture capitalist is going to want to fully understand all of the risks associated with investing their money. Of course, with the risks come all of the amazing perks! Be certain to detail all of the fabulous benefits your startup has to offer, such as a percentage of the company or a seat at the table. And, then, as the old adage goes, “practice makes perfect.”

Raising capital for a startup is no easy job. Hopefully, some confidence, extensive research, and a fool proof pitch, will help you on your path to success. Next step . . . getting an appointment!