A start-up business is usually on a constant look out for capital from outside investors. Investors include banks, venture capitalists, private investors, government, foundations and even family members.
Although “pitching” plays a major role when you are trying to raise capital, the realities of your organization are so much more important. You need to offer a product or service that is meaningful and long lasting.
Here are some tips you can use when raising capital:-
1. Build a Business.
The best way to get investors is to build a business immediately.
2. Get an Intro.
Have current investors, lawyers, consultants, accountants and other entrepreneurs introduce you to investors. This way, they will learn about you from sources they respect.
3. Clean up your act.
Get rid of obvious flaws in your system. Flaws often occur in your intellectual property, capital structure, management team and stock offerings.
4. Disclose Everything.
Don’t attempt to hide problems that can not be cleaned up immediately. Do not allow anything to damage your credibility.
5. Acknowledge, or Create an Enemy.
Believe it or not, investors do not want to hear that your business has no existing competitors. This only tells them that there is no existing market out there for your product or service, or that you are too stupid to use GOOGLE.
6. Don’t use old Lies.
Here are some examples of lies start-ups tell Investors. Refrain from using them and be prepared to come up with new ones:-
- Our projection is conservative.
- All we have to do is to get 1% of the total market.
- Several investors are already in due diligence.
- Key employees will join as soon as we get funded.