My Top 3 Tips for Fundraising for Start-ups & Entrepreneurs
Entrepreneurship is extremely challenging at times, with many highs and lows. It involves risks, challenges and anxiety, which can deter many from pursuing it. But at the same time, there is an incredible thrill of watching your business idea turn into reality.
Most entrepreneurs would agree that raising funds can be one of the most difficult parts of a business. Finding an investor isn’t impossible, but the journey of raising funds can often be challenging and intense. Here are some simple tips that will help you during fundraising. These tips are simple; yet, often overlooked.
Nothing Happens Overnight: Fundraising is a gradual and painstakingly slow process. Don’t expect overnight decisions or miracles. The key to successful fundraising lies in patience and persistence, as well as consistent communication. Fundraising takes time.
It is essential to run towards the finish line. But don’t expect others around you might have the same urgency to seal the deal. It is a hard pill to swallow, but it is true. Plan for at least six months or more to raise your money. Be prepared for a draining and time-consuming fundraising process.
During this seemingly long time, you must be prepared to handle eventualities that might alter the fundraising process’s dimension, such as a change in market realities or the economic downturn (COVID-19 pandemic has taught us lessons in a tough way).
It is all about building relationships: it sounds cliché, but it is true. We are so technology-driven today that we often forget the power of building personal relationships. When it comes time to fundraising, things are often much smoother. when you take the time to establish meaningful business connections.
Numbers matter: I have come across several entrepreneurs or founders with brilliant business ideas or products who are clueless about their venture’s financial health.
It is surprising how they struggle to answer when they will break even, how long they have until they run out of money, and what their cash flows look like. Remember, as a start-up owner, you need some degree of comfort with data and financial numbers. It is not just about having financial statements ready, it is about your interpretation of the numbers. Your flawed understanding of numbers can become a significant roadblock when raising funds for your company.
Be Gracious: Sometimes, despite best efforts or intentions, things don’t work out. Sometimes founders are overwhelmed with legal documentation, covenants, due diligence and more. The journey of raising funds is a roller coaster. In such a scenario, when you have your back against walls, be gracious in accepting rejection. Express gratitude and move on. Remember, things can change. The deal may take shape in the future, or a recommendation can help you get funding from someone else.
The truth about entrepreneurship is that you will have to work extremely hard to realise your vision and continue to walk on an uncharted path. There is no fixed path to launching and running your own business.
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