You may have an idea or even a small company that is already running well, and now is ready to grow. Maybe you want to implement your idea and make it a full-scale operation or scale of the size of your company. Unfortunately finding the finances to do so it’s not something that is easy for everybody. In situations like this, you may need funding from an outside source. Where exactly do you find this funding?
It can be quite confusing for start-ups to know where to begin when it comes to securing funding. There are so many questions that need to be answered and so many options for you to take. This guide helps to answer those questions and make securing funding a smoother process.
Find the appropriate investors:
There are so many options out there when it comes to finding the right investor. In order to locate the right investor for your industry before attempting to gain.
It is important to consider the size of investment that you are trying to gain and also how fast you are expected to launch your product or grow your existing company.
What type of investors are available?
There are so many different types of investors are available that it is important to know the characteristics of each type:
- Bootstrapping: Bootstrapping is a commonly used term for self-funding. If the funding is available to you, it is a great way to get your project off the ground so that you can then show results to larger investment options.
Bootstrapping also allows for you to get your product or service up and running without having to wait outside investment to come through.
- Crowdfunding: Crowdfunding has been gaining popularity over the past few years. It involves gaining multiple small amounts of finance from more than one source or person. This can be in the form of a loan or an investment.
- Angel investor: Angel investors are behind the funding for major companies when they first started up. Companies such as Google and Facebook used angel investors to fund their projects. Angel investors are individuals with extra cash that they are willing to invest in companies. They normally work in groups with other angel investors known as angel investment groups and networks. They provide monitoring alongside the financials influx.
- Venture Capital: Venture capitalists are funds that are run by large organizations. They invest in companies that show huge potential for growth and tend to exit at the point of an IPO or company acquisition. If you require a large number of funds for running your business, you will need an influx of cash from a venture capitalist.
Conduct due diligence properly:
Most start-ups do you not realize the importance of due diligence. It is generally assumed that due diligence is only required to be done by bigger companies wishing to acquire smaller sized businesses. It is in fact equally important that start-ups and small size businesses conduct due diligence in a proper manner so that they can secure investment into their company.
Due diligence allows a start-up to gain legal, financial and technical grounds which they then can use to pitch to investors to gain an influx of cash to aid them to grow their business. You can find a reputable due diligence tool online today.
It is important before starting the due diligence procedure that you are confident in how to conduct it. Remember knowledge is always power. The following steps should be taken when choosing due diligence tools and creating your due diligence portfolio.
- Create a technology roadmap:
It is important to set goals for your company that have to be achieved in the foreseeable future. Make sure your goals are attainable within the next 6 to 24 months. This allows you to create a solid proof of concept which can then be relayed on to investors.
- Clearly define an outline the specifications of your product:
If your product is not clearly defined with all the specifications, it is not ready to be created and is merely a concept. This concept will not be invested into by an investor until they know how your product functions completely so that they can assess the profitability in the long run.
- Have your documentation in place:
Defining your specifications verbally is not enough to give an investor a reason to have enough of an interest in your product or service. It must be presented in written form and clearly defined so that they can understand the specifications clearly.
In addition to this, you need to portray to your investor that you have all the legal and financial documentation in place also, so that they know what they are investing into is clearly planned, and will be implemented properly and efficiently.
- Clearly define your testing and research procedures:
For any product to be successful in a market needs to be tested and researched properly. A company needs to know that there is a requirement for their product or service, and what the target market requires from them in order to create a successful product. When applying for investment from an outside source using the correct due diligence tools to research and define the product correctly is essential. This allows the investor to know the feasibility of your product in the market. It also shows your investor that you have fully understood your product and the industry it is located within giving you more credibility and them faith in your product.
- Use the correct due diligence tools:
Due diligence is a confusing process altogether for someone that is not familiar with it. This confusion is then compounded by the various tools and methods that are required. Find a due diligence tool that combines everything that your company needs to successfully implement due diligence. This will not only aid the process to go faster but also prevent any mishaps thus allowing your due diligence process to go seamlessly.