The global economy is evolving rapidly with the emergence of so many new startups. A lot of innovative minds across the globe are starting their own ventures to provide modern solutions. There are a few things entrepreneurs need to start a new venture: a solid idea, an enthusiastic team, a roadmap, and, most importantly, funding. Startups need funding at regular intervals to meet their business requirements. Lack of proper funding could be a major problem for startups. In fact, 82% of small businesses failed in 2018 due to cash flow problems. Therefore, startups need to secure funding to avoid failure. Businesses have the challenge of attracting VC funding for their tech startup.
If you are a startup owner, you need to take care of funding to ensure proper growth. As a business owner, you need to catch the eye of venture capitalists (VCs) to secure funding. So, the more VCs you approach, the better the chances of securing funding. But with the increasing competition in the market, VCs have become extremely particular about where they put their money. This is why you need to have a solid strategy to attract VC funding for your tech startup.
Tips To Attract VC Funding For Your Startup
- An Impressive Elevator Pitch: How you approach VCs is extremely important. The first thing you need to do to send to investors is an elevator pitch via mail. Make sure you draft and short and crisp pitch enlisting the problems your company solves, how it solves them, the size of the target market, etc. Avoid filling up pages with unnecessary information. The pitch itself should sound like a great investment opportunity with a high probability of good returns. If you are successful in drafting an impressive elevator pitch, consider half the work done. Your pitch could be the way to attract VC funding for your startup.
- Create A Funding Profile: A very common mistake that CEOs commit is attaching a mega PDF file along with the pitch in an attempt to create a solid impression. However, most of these files end up in the spam folder of investors. A better alternative is to create a funding profile. A funding profile is essentially an online profile that investors can visit in case they feel the need for additional information. You can mention the link along with the elevator pitch to stand out.
- Having A Roadmap: If your startup offers enough value, the chances of attracting VC funding for your tech startup are pretty high. But having a roadmap further strengthens your chances of raising funding. Having a roadmap sends out the message that you are here in the long term. With a roadmap, investors know about the upcoming updates and developments in advance. This way, they can assess the impact of those decisions on business growth to make an investment decision.
- The Pitch Deck: Here comes the presentation time. If the elevator pitch served the purpose, VCs are likely to meet you for a detailed conversation. This generally involves a PowerPoint presentation spread across 10-20 slides, explaining the business plan. As a founder, this is your time to shine and create an impact. More than the idea, VCs invest in the person. You need to communicate your idea, vision, goal, and future plans to crack the deal. If the pitch deck is successful, you might be literally a few days away from getting the funding.
- Having A Backup Plan: A key factor that investors look for in companies is resilience. The past couple of years has been really disruptive for the global economy. Hence, investors might be hesitant to put their money in something that lacks the resilience to withstand disruptions. This is why you need to have a backup plan ready. From having a monetary buffer to having alternate plans to retain customers, you need to figure out several things to ready a backup plan. It will only better your chances of attracting VC funding for your tech startup.
Final Word
All the steps following the elevator pitch fall under the “due diligence” phase. The phase starts once the investor shows more interest in knowing about your startup. This is where you need to grab their attention as a founder. If you were associated with a successful business prior to starting the venture, your chances of success are 30% higher. Therefore, you need to mention this detail clearly to better your chances of attracting funding. It is also important to have a team of experienced advisors who can guide you throughout the fundraising process. As you embark on the fundraising journey, you will come across many hurdles. Therefore, it is highly important to have a crystal clear vision to achieve success.