Startup founders spend many hours to work out an approach to raise capital by endlessly improving their business plans. The process isn’t easy, however. Startups need to work on their game plan, build strategies, and go out into the market with a clear vision and a right amount of structure that could help them find their prospective investors and offer them what they have been seeking in potential investment-worthy endeavor.
Here are the steps involved in the process of capital raising.
Begin with an idea
An idea alone is not sufficient to attract funds. You need to dig deep into your idea and identify your Unique Selling Point (USP) that help you stand apart from the competition. What is the problem that you are addressing and what is your proposed solution? After you have identified the same, try to express it in a couple of words.
Convert words into a prototype
The next step after identifying your USP is building a prototype around it. This does not have to be a full-fledged product. Taking the unique features and putting them into a Photoshop, Powerpoint, or presenting it to your investor on a piece of paper would suffice. Remember that investors prefer seeing tangible things. Apart from this, you can create a small animated video about your product.
Come up with a functional prototype
This can be a challenging phase for many. After all, converting a pictorial prototype into a functional one is not a piece of cake. However, you need not develop a finished product. Work on the unique features instead. It is better to seek professional help. Developing your functional prototype is extremely important so make sure to be careful.
Customer acquisition
Getting traction for your product is something that’s also challenging. This is when you need to pull up your socks and do all that you can to spread the word around as much as possible. Be it Facebook, Twitter, YouTube, or any other channel – get active, talk about your product and try to acquire prospective customers.
Monetise strategies
Working on the USP of your product and reaching this far you would know that your idea is feasible. This is when you can consider building a business model around your feature. This includes determining ways to generate income from your idea. Identify the primary, secondary, and tertiary stakeholders for your business. The stakeholders you choose will play different roles in your business at different levels. Successful implementation of strategies at this time can help you secure some funds that would enable you to move a step forward. If you are a novice, it’s better to seek help of professional full time or part time CFO.
Scale your product
By the time you reach this far, you have the cash coming to your bank account. Now is the time to spread your wings. Scale your product to accommodate wider usage. By this time, you are all ready to approach your investors with a clear number to tell them how much money do you require, for what, and what would be the Return on Investment (ROI). With factual answers to your questions, you can move on to develop your pitch.
Prepare a pitch
The pitch that you create here is the stretched out version of what you had created initially. Create a simple presentation describing the feature set of your product, the numbers coming out of traction levels, and market size. You not only need to impress your investors with your business idea, but also convince them that investing in your business or product is worthwhile.
Seek investors and deliver the pitch
After you have prepared your pitch, utilise your local Angel Network to look for investors. Besides, you can join any accelerator program or approach University incubation center. Once you have found out your investors, try to showcase your diligence and intelligence. Convince them that you can be trusted. This is the time to impress your prospective investors. However, remember that you might not be able to achieve success the very first time, so be prepared for rejections as well.
Improve your product
To ensure that your product adjusts with the changing internal and external variables, don’t forget to refine your product constantly. This increases your chances to attract investors, whose funds can be utilised for development or marketing.
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