How Do You Get the First Round of Investment in Your Start-up?
You have created an amazing product, or have designed a revolutionary service; either way, you are absolutely certain that you will disrupt the status-quo of many corporates and various size businesses. You may have created a new marketplace or a new way for employees to generate more value for their employers or set up an app that addresses various aspects of mental health – you found an untapped market.
In other words, you have created a niche product/service that addresses a need that is already there, and you can cater for a user segment that no one else has targeted yet. You have the first mover advantage, and you are ready to take on the world.
You spend a lot of your waking hours thinking how, the moment you will be pitching your solution to angel investors or venture capitalists (VCs), they will all jump at the opportunity to invest in you … for many start-up founders, for too many actually, that dream never becomes a reality.
Why? Because to be in it, you have to come out of it. If that makes little sense to you – or no sense at all – it should. And this is why:
- Start-up founders are so immersed in their own bubble of creation and ideation related to the solution to a problem they may have identified/invented that many totally disregard two simple facts: are they too early, or are they too late?
- Solutions, especially those for all things digital, may not actually solve a real-world problem. Many solutions, at least in our experience at Circklo, invent the problem.
- Some founders wrongly assume that the investors they pitch will immediately understand their language; no, they will not. While you, the founder, may be a graduate of computer science from MIT and know exactly what you have created/designed, they cannot possibly be expected to know that unless they have a “dictionary” handy. Do not, ever, pitch an investor using this language: ‘We propose a solution for differentially private GP bandit optimization that combines a uniform kernel approximator with random perturbations, providing a generic framework to create differentially-private (DP) Gaussian process bandit algorithms’.
- How does your solution/product generate revenue? How quickly – and realistically – can you scale?
- What are you willing/prepared to offer an investor? For instance, how much equity are you ready to offer them? What is the return on their investment they can expect from you?
- How do your market research findings give credence to your solution/product?
And much, much more … this is what “to be in it, you have to come out of it” is all about.
A start-up seeking to raise funds – irrespective of its fund-raising stage – needs to speak the universal language of business, and its founders need to be able to “translate” complex technical terminology into plain, simple concepts. But, most of all, they need to show an entire journey of thought process, market research, competitor analysis, ecosystem, revenue growth projections, cash flow analysis and, also, stakeholder and risk matrices (as a minimum).
All these will tell investors that you know what you are doing, that you can come “down to earth” and be ready to grow your business and be profitable. They are investors, not donors – if you understand that, and permit us to use a colloquialism here, you “cracked it.”
And, if you don’t know how to do it or where to start, don’t worry – have a look at our start-up Business Configurator which is solely dedicated to sustainable start-ups. We help you configure your start-up for both profit and purpose and, after 12 weeks of intensive business coaching, mentoring, dry-pitching, and networking with industry experts, angel investors, venture capitalists and other start-ups in our community, you will see the enormous difference we can make: we optimise your business to be investment-ready.
Join our Configurator to develop your product/service and be confident about what it can deliver to your customer base. Apply now.