Raising funding for a tech company is no easy feat. It takes work, time, and money — not to mention the right connections. But if you're smart about how you go about it, there are ways to get funding without giving up too much of your business' future value.
Before you start reaching out to investors, it's important to have a clear idea of how much money you need and how much time you have left before your startup runs out of cash. Estimate your burn rate—the amount of money spent each month on operating expenses—and account for the cost of hiring new employees and office space. From there, determine the value of your business by finding comparable companies that are similar in size, sales numbers, and industry. Lastly, make sure that any funding proposal includes enough cash from investors to last until revenue starts coming in from customers or clients (though this may be easier said than done).
When it comes to raising money, a valuation model is your friend. The best way to use the valuation model is to compare it with the actual value of your company. If this number is high then you are ready for investment.
The reason why entrepreneurs make mistakes when using a valuation model is that they don’t understand how it works and what factors affect its outcome. They also forget about their competitors or fail to consider other factors such as market trends and industry dynamics when calculating their company’s worth.
An investor deck is a presentation that you’ll give to potential investors. It has all the information they need to make a decision about whether or not they want to invest in your company.
The first step to creating an investor deck is writing down everything you could possibly think of that would be relevant to your business. If it doesn’t seem like anything important, put it at the bottom of your list and come back later—you might find it useful after all!
Once you've made sure that everything related to your company has been included, organize them into categories according to what stage of development they are in (e.g., product concept, early stage prototype), then prioritize them by importance and relevance until there's nothing left but what matters most right now (and maybe something extra).
Finally: don't forget about visuals! Graphics can help illustrate points more clearly than words alone, so remember that this isn't just a text document—it also needs images from logos through photos/videos showing people using or enjoying whatever product or service yours provides
Before you begin the process of reaching out to investors, it's important to make a list of all the businesses they've invested in previously. This will help inform your decision on whether or not an investor is right for your company.
For example, if an investor has invested in only one other company that sold successfully and another that failed miserably—as well as several others that just haven't been publicly documented—you may want to steer clear.
Additionally, consider what you can afford to give up when working with an investor: equity? control? team members? Marketing, sales, and customer relations are all areas where investors often want (and even demand) input into how they're managed at early-stage companies.
The next step is to get a list of the businesses they've invested in previously. Once you have this, look for patterns in their investments: do the businesses have similarities? Are there differences between the businesses they have invested in and those they haven't? And finally, what kind of differences are there between the companies that have been funded by other investors but not by your VCs?
It may be possible to find out some details about how much money each company raised or even see their pitch deck (a summary presentation used to sell an idea). If you can see a company's pitch deck, look at it closely and make sure that it matches up with what you believe your business will be able to accomplish once it goes live.
The most important thing to bear in mind when considering investment is that there are different types of investors. You will have the opportunity to work with a variety of people, and each type has different needs and preferences.
Investment comes in many forms – some investors demand your equity, while others expect something else from you. It's up to you to decide how much of which assets you're willing to give up in order for your business idea to become reality. Here are some things to consider:
As a tech entrepreneur, you have to have a good handle on marketing and sales. You also need to be able to manage customer relations. If you don't have the skill set or resources for these tasks, consider hiring people who do.
Even though you might be working hard in your preferred field (engineering), it doesn't mean that marketing and sales are not important, too. It can be tempting to just focus on building something cool without thinking about how it will get into people's hands. But if customers don't know about what you're doing or how they can benefit from it—or if they're put off by how difficult it is for them to buy from you—you could lose out on an opportunity for success that could've been so much easier if only someone had thought things through ahead of time!
Raising funding is hard work, and you need to be prepared to put in the time, energy, and sacrifices that go along with it. You need to do what it takes—and not just once or twice—to get your startup off the ground.
When building relationships with investors and demonstrating your value as a team leader (or founder), preparation is key. The more prepared you are when approaching investors, the easier it will be for them to see how they can help build or strengthen your business plan.
Raising investment is a combination of skill, luck and persistence. The good news is that it doesn't have to cost you everything – if you're prepared and willing to give up something in return for the funding, there's a good chance you'll be able to raise what you need.
Photo: Unsplash
