5 Easy to Follow Rules to Raising Money For Your Startup

It’s a tough reality, but over the course of their lifetime, most if you an entrepreneur, you will be raising money for your startup more than once. While fundraising can be difficult, both mentally and physically, mastering the art of raising money is a key skill that will help keep your startup running smoothly and efficiently, leading to a greater chance of success. By following just a few simple rules, you’ll be able to ease the stress associated with fundraising, helping you raise money quickly and easily for your company.

Raising Money For Your Startup

Rule number one: fully commit to fundraising.

Some startup founders can be surprised by how distracting seeking business funding actually can be. This is why it’s crucial that once you decide to raise money, you seriously focus on it. Go into full-time fundraising mode and focus all of your attention on your goal so that you can get your funds quickly and get back to work on your startup.

If you try to raise money while also trying to keep growing your startup, you’ll tend to see your growth drop sharply. And your startup cannot endure that level of distraction for very long.

Next, it’s time to start getting introductions to investors.

Now, getting introductions can be pretty tricky, and their effectiveness can vary greatly between each introduction. However, by getting personal introductions and leads to new investors directly, you’ll have a much easier time convincing them to invest in your startup. Two, almost fool-proof, ways to get an introduction are:

  1. From a well-known investor who has already invested in you.
  2. From a founder of a company who has been invested in by a potential investor.
  3. From a business plan consulting firm with an existing base of investors looking for viable deals.

Once you’ve been introduced, it’s important that you learn when an investor is actually saying “no” – even when it sounds like a yes.

This third rule can help you avoid being misled and wasting time. That’s because, some investors prefer to wait it out before investing in your startup and can try to lead you on, without actually committing. Some use language that makes it sound as if they’re committing, but they actually aren’t. Others might just stop responding to your emails until they become interested in investing down the road, and pretend they’ve just been distracted until then.

Whatever the case, teach yourself not to be tricked. If you believe an investor has committed, get them to confirm it. And until then, regard them as saying no.

This brings you to the fourth rule of raising money for your startup

Talking to multiple investors at the same time. This not only saves you time when raising money for your startup, but it also helps you counteract the above rule, allowing you to figure out which investors are more promising than the others. You won’t have the time to deal with investors one at a time and not every investor deserves the same amount of attention from you. The best solution is to talk to all potential investors in parallel, but making sure you give higher priority to those who are more promising.

Going with rule four, you next to need to create multiple plans that match the different types of investors that you’ll be pitching to. For example, if you are pitching to an investor who in the past has invested large amounts of money toward other investments, you should talk about your most expensive plan. In the same way, if you’re in the talks with an investor who gives out smaller amounts, and you haven’t raised any money yet, try focusing on your least expensive plan when pitching.

And finally, it’s time to get your first commitment. Getting the first investor to commit can be the hardest part of raising money, no matter what stage you and your startup are at, but once you have one, it can become increasingly easier to get other investors to commit.

Once an investor commit, make sure you close any of the money they’ve committed to you. Even a day’s delay could bring news that causes an investor to change their mind, so once they say yes, set up a timetable for getting the money in the bank and don’t be afraid to babysit them until it happens.

Overall, raising money for your startup can seem like a new experience every time you do it. But by following these simple rules, you’ll be able to master the process and get your funding quickly and easily.

 

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