Funding undoubtedly plays a major role in scaling up a business. A lot of questions arise – Is it the right time? How much will I need to scale up? How much will they invest?
All these must definitely not stop you from growing or wanting to grow.
There is a lack of investment readiness that can be seen among organisations that are seeking investment. The issue of investment readiness is something that needs to be tackled. Here are some tips on how to make your start-up investment ready.
Believe your business
Ideas are there in plenty. People have great ideas, but what sets them apart is the way they tell it. Those with the best stories are the ones who are unique in the way in which they convey it.
Your idea needs to provide a solution to an existing problem, then model it and test it. Stories are powerful and through the story, you can showcase that the problem you are solving is relevant. For this, you need to believe in your business. If you don’t believe in it, why will anyone else?
Understand your ecosystem
To truly distinguish between an innovator and a fabricator, one must understand the ecosystem. The ecosystem includes all factors—the friends, foes, competitors, bystanders as well as the larger environment—the laws, policies, social norms, demographic trends, and cultural institutions. So you need to have a clear idea and check your domain, customers, influencers and the law makers.
Understand your resource needs
Before thinking about the investment, one needs to have a clear idea about the resources needed for your startup to function smoothly. This includes your team, vendors, machines needed, location as well as the other stake holders.
Understanding of financial resources
When it comes to the financial resources, you been to be sure of the capital needs, the working capital, cash flow and P&L and apply this in your Business model.
Apart from this, a thorough idea of the financing methods is also needed. One needs to understand the Investment Fundamentals in terms of Debt Financing, Short term financing, Capital funding, Friends & Families, Customer, Seed fund, Angel, VC, Private Equity, and others.
Structure your company
The structure of the company must be decided, for example, Private limited etc. The accounting must be in order and transactions must be well documented. The compliances must all be in place and all the debts/investments must be out in the open.
Value your belief
In your plan, try and ensure a stable revenue. Having a partner to invest is a positive move. Think about the kind of growth that you are expecting – organic/inorganic. If your growth pattern is going to be inorganic, it will be more of Angel / VC funding. Keep that in mind while seeking investment.
Caution to avoid failures
When your idea is final, don’t forget to validate the problem with a bigger sample size. You need to understand the hidden influencers and be clear on the behavior of financial resources. One must also be open to changes in the market. Remember, startups also requires constant planning and validation.
To showcase your Investment Readiness, ensure that you prepare pitches and understand the need of the market. Be clear on your values, milestones and terms.