Running a bootstrapped startup is good for the initial period only, but at one point, co-founders have to start looking for a venture capitalist or angel investors to come on board.
Participating in different fundraising competitions or approaching the VC directly can be risky. And one has to optimize their chances of getting funds straightforwardly.
Here are a few steps a startup can follow to optimize their chances of raising funds.
- Understand How Startups Are Valued
- Identify Your Specific Risks
- Try To Generate Some Real Sales
- Have A Repeatable Sales Model
- Reduction Of Any Risks And Flaws Right Before Approaching The Investors
1. Understand How Startups Are Valued
Risk and Reward are the two parameters on which a startup is valued. Low risk and high returns are at top priority for any investor. And risk has an inverse relation with valuation.
But, if some real customers are willing to pay for your product even in the most dynamic environment, investors can play a gamble once.
2. Identify Your Specific Risks
Every startup at an initial stage has its risks. But the risk each startup possesses may vary.
If your startup aims to claim astounding services, but then you lack professionals on board, you are running a huge risk.
The claims your startup makes should be real.
3. Try To Generate Some Real Sales
If you are currently bootstrapped and running the startup with your money, fetching an investor will be easy.
The startups that earn profits even on a lesser scale and have an appropriate growth plan can easily fish investors.
Having an organic sale of your product can optimize your chances of raising funds.
4. Have A Repeatable Sales Model
If you have a repeatable sales model, then you can easily convince the investors and raise funds.
Repeatable sales model means a recurring inflow of money.
For recurring inflow, customer service, and customer experience should be your top priority.
Make sure right from the beginning, until the whole transaction is complete, the customer should feel like a king.
5. Reduction Of Any Risks And Flaws Right Before Approaching The Investors
Stepping outside of one’s comfort zone is fine if the risk taken is calculated and worthy. Develop an appropriate risk-reduction strategy to tackle all the problems that can come your way.
If not completely win over the risks, make sure you can reduce the frequency of occurrence.
Make sure you have an emergency plan for high impact and low probability of occurrence risks as well.
For an infant stage startup that is looking out for seed funding and angel investors to get capital, there is no perfect way to value the startup’s worth.
However, there are ‘N’ numbers of factors that can optimize your chances of raising funds.
At the end of the day, the art wins and the master gets funded!
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