Setting up a new business is exciting and can be hugely rewarding. But before you get to this stage, you need to get your business off the ground. This often requires a lot of money. After all, you’ll likely need staff, equipment and an office space if you want your business to grow and thrive for many years. Don’t worry if you haven’t got the money needed to achieve these things, though, as this is exactly where start-up fundraising comes in.
What is start-up fundraising?
Also known as seed capital, start-up fundraising is when a company raises money in the early stages of its journey to help the business afford crucial things they need to grow. While you might have some savings yourself, and friends and family may offer their own contributions, you may require much more money.
Without this investment, you’ll struggle to get your business going. Money is essential for your competitive advantage. It can pay for staff, PR, marketing, sales, and much more. Typically, investors provide this money but, to get the right investors on board, you need a good plan in place.
Devise a plan
Unfortunately, it’s not as simple as spreading the word that you’re looking for capital fundraising. Instead, an investor will want to hear the story behind your company and how it’s eventually going to make money. You need to highlight your business’ vision and mission and be able to persuade investors that your product or service is worth backing. It’s a good idea to have some customer reviews and data to show the viability of your product, and in most cases you’ll need to have already created the product. That way, an investor will get a feel for your business and be in a better position to determine whether it has a place.
It's also wise to have a figure in mind. Of course, you might want to raise as much as possible, but you need to show any potential investors exactly what you will use the money for. Usually, start-ups aim for enough money to get them through the first 12-18 months before going through another round of funding.
Remember that with any money awarded, an investor will want a percentage of your business in return. It will be important to project your future growth using detailed financial and growth plans. Ultimately, your growth plan needs to show someone where your business is, where it’s going next and what the future looks like - with detailed information on how you’re going to get there.
How to find an investor
With a growth plan in place, and an idea of exactly how much money you need, it’s time to start looking for your investor. The best place to start is with your fellow business peers. Even if someone isn’t in the same industry as you, if they’ve had a positive experience with an investor, why not ask for an introduction?
Networking can also be useful at this stage. After all, talking to as many people as possible is a sure-fire way to find the right investors. Put a message out on your business network, attend events and look to build your connections via LinkedIn.
The next step is to book a meeting, and this is where things get very exciting. After all, this is your chance to shine - but you need a strong pitch. It doesn’t need to be a detailed business plan, but it should illustrate your business, you as a person, and where your business is going.
Don’t be afraid to show off a little personality. People do business with people, but keep in mind that you need to be professional, honest, upfront, and strong. Explain how much you need, why, and how you will spend it. The last thing you want is for your potential investor to walk away unclear on your business or fundraising plan.
Nailing the right pitch is easier said than done. But there are tools online to help you. SeedLegals, for instance, supports you with everything from the pitch to the legal and administrative bits of starting and growing your company so that you can focus on doing exactly what you’re good at. From funding round support to pitch creation, their team of experts can help you raise investment the right way.
Money is just the start when it comes to a successful start-up, though. Above all, as a founder, you need to be committed, hard-working and strong-willed. The road to success might not always be easy but, with the right attitude and support, the rewards can be incredible.