Applying for funding as a startup seems to be the natural course of action. However, knowing if you are ready for funding is another matter. Investors need to know where your business is heading before they will even consider your startup for funding.
If an investor can see that your startup has a bright future, they will more than likely consider investing in your business. This means that you have to make sure that your startup is ready for funding. How do you know if you’re ready for funding, and how can you ensure that you’re ready?
Do you have a refined business plan?
When you have a business plan that is well-structured and realistic, you will have a clear idea of where your business is heading. This will put investors’ minds at ease because you seem to know what you are doing, where you are heading and how you will get there.
You cannot go wrong if your startup has a refined business plan. To make sure the business plan is refined, review it often and make sure that all of the elements are well-structured. This includes elements such as financials, products, markets, marketing, and target markets.
Have you done market research?
The reason why market research is so important is that it allows you to know exactly where your product or service falls within the market. Having this information at the ready improves your chances, especially if you have the numerical research to support your business plan.
As a startup owner, knowing exactly what is going on in your market is of a great advantage to you. It shows that you are knowledgeable but also keep up with what is happening in the market. This sends investors a good message, and they might find you more attractive.
Do you have short-term and long-term goals?
Most startup owners set out one-, three- and five-year plans and goals for their business. If your company has these goals set out, you have a clear path of where you are heading. It makes it easier to source the right team, elements and service providers.
An investor can take a look at these goals and based on that decide if funding your company is a good idea for them in the short and long term. Make sure to have this ready before you even start pitching your business idea to an investor.
Is your brand strong enough?
Building a strong brand is important before applying for funding. This does not mean that your brand should be as well known as Nike or McDonald’s. But, if you are able to have a stable following and a few loyal customers, you are all set.
A strong brand shows the character of your business and usually helps to attract customers. Investors look at this when a business is being pitched to them. So, make sure to build a strong brand before applying for funding.
Do you have a financial goal?
A financial goal in this sense does not mean how much money you would like to make or the salary that you want to pay yourself. In this sense, the financial goal is the amount of money that you need to raise for funding your business.
If you are able to bring a report to the table that shows the amount of money you need, and where each cent will go, you are ready to apply for funding. Investors appreciate upfront answers and like to know how much is expected from them.
Will your investors receive something in return?
When applying for funding, it is important to show the investor what they will be getting out of the deal. For example: if you are using crowdfunding for your startup then a good idea is to give those who donated to your business early release products and sneak peaks, to make it worth their time and investment.
It also helps if you are able to display an amount of what you expect to make in revenue to your investor. This will also motivate them to sink some money into your company, as they will be able to get something out of the deal.
Do you have a strong team?
Investors love startups who have strong and skilled teams. A startup does not necessarily have to have a big team of 50 employees, but a small multiskilled team will suffice. This gives your investors peace of mind to know that your brand will get built based on the business plan and the goals set out.
Once you believe that your team is strong and can manage all that comes their way, you will be ready for funding.
If you have answered all of these questions with a “yes” then you are ready to apply for funding. Take to the Velvet Platform website and see how you can form part of the startup ecosystem and apply for funding through us. For more information contact us.