The most important thing to recognize while fundraising is the external appearance of our startup. Only if one’s startup does look stellar from the outside will someone want to trust one with their money. The most integral step to this is to have a strong core team that is working for the startup so that it exceeds expectations on a daily basis. Another thing that is important to for a health manner of fundraising is that the core team must also have an integrated approach for fundraising as though there are many ways to approach this process there are only few ways which can be sustained by the startup. The integral first step is to identify this process which suits the startup and to stick to that plan. This should be followed by the process is to cultivate the startup before asking for money. If this step is not complete then the whole process will fail. In order to explain this better I would like to use a metaphor. If a rocket’s trajectory and target is not fixed no matter the funding the entire project will fail. Following this suit the trajectory and target of the startup needs to be fixed.
Many people do believe that while fundraising they need to show a lot jazz and feel that only if they put up a show will the investors be impressed and then give them the required funds. That is myth because most of the times the founders consider all other the factors other than the fake dress up that these founders like to do. Many investors choose to invest in the founder because they feel that only if the founder is dedicated to the startup will it survive the turmoil that today’s uncertain market throws towards all budding startups. On the other hand, some investors are mainly enchanted by an innovative idea, and not wrong to do so as the generation of “9-6” jobs are long gone and now is the time for innovation and job creators more than job seekers. Contradicting that there are some investors who make their decision based on the financial standing of the company. The point being made here is that know your investor and alter your pitch accordingly.
A trick which many entrepreneurs have considered is to make the idea bigger than it actually is. Now what I am trying to say is not to over-inflate the idea and to sell it as something that it actually is not, but if we make the case larger than the organization and begin to sell it as a viable solution for a problem which has no other viable solution that will definitely get the investors going. Another thing to remember while mastering this art is to realize that quality triumphs over quantity. About 75-95 percent of seed capital come from 10-15 percent of the investors. One needs to identify these particular investors and to target them, instead of targeting every investor on the market. This process will be more cost effective and will also reflect more upon the market awareness of the founders which will again impress the investors.
Now once the startup has identified these 10-15 percent of these investors, coaxing them into investing is a whole another ball game. Some of the experts have often described this process as courtship. A process in which we have to very subtly but aggressively try to ‘woo’ the investor. The startup has to sell the idea like a 1960s salesman to the investor and convince the investor that his idea is the next big thing. Many people often wonder what is the correct way to approach this. Some people choose to just brag about their and idea and also try to show what a boon to society they are. On the other hand, some like to show only their vulnerabilities so that the investor would feel important and would then choose to invest in the startup. Though it might seem easier to choose one of these solutions, but it is not a sustainable course of action. As we often do in our lives the middle path is the most viable solution. Only if the founders show the right amount of qualities and frailties that actually seem like a balanced pitch to the neutral investor but as mentioned earlier it depends on the investor.
At the same time, we need to realize that fundraising is not only about money but also about getting expert help so that one can scale up. Thus, one needs to recognize the help that they need and ask for that help. This in my opinion is the correct manner to approach fundraising.
In conclusion, fundraising is a very subjective art. One cannot just write a book about the correct way to approach this and then leave it. It is an art that requires constant tweaking and changing in order to achieve a good pitch. One of the most common searches on Google with reference to start ups is what is the best way to fund raise. There is no perfect way there are sustainable ways and one needs to recognize these sustainable ways and then follow up on those. This has been mentioned before too that fundraising is an art and not a process. We have artists who work on their art for years together before achieving their peak. So, to all the budding startups who are reading this article to get some guidance on this topic, the only advice would be to practice. Practice all your skills and keep at it because that is the only way you will become a master of this art.