Do you want to grow your business? Do you have cash flow issues and need funds? Are you looking at fundraising options?
There are 5 different funding sources that you can consider:
Bootstrapping is the use of your own funds.
Debt Financing is commonly called a loan that will be repaid with interests.
Friends and Family can lend you money or inject money as equity into your business.
Angel Investors are business owners or serial entrepreneurs who want to invest their money.
Venture Capitalists invest in startups and want a seat as board members.
The best option is bootstrapping because you invest your personal funds without losing control or getting a loan. But it is not always enough or easy to fund with its personal savings. To choose the right funding source for your business, you need to understand why you need the money and how you will use it. You have to understand the psychology of the potential investors.
I worked in Private Equity for more than 4 years. I used to receive one Investment Proposal every week to review, analyze and recommend or not, to the Senior Management of my company. The majority of my time was spent on due diligence. It was an investigation because our main objective was to know how much would be our return and what would be the risks. Therefore, I had to investigate the specific industry, the business, and the demand, among other things.
You need to keep this in mind! Investors look for the return on investment (ROI) and the risks involved.
Regardless of the funding option that you will choose, you will need to build a Business Plan. It is vital for you and the investors to know everything about your business. Once you researched your competitors, the market size, the customers, you will need to focus on the problem you solve and the opportunity. The investors will be particularly interested in your financials.
Here is the list of important aspects that will lead to success:
- Be realistic with your goals and projections
- Have a skilled management team
- Formulate clearly your ask
- Build a robust and sustainable business model
Bear in mind that when you pitch to investors, you will have a short time, and you need to be prepared to answer questions. I would recommend ensuring that you communicate clearly your ideas, and practice knowing everything inside out and be prepared. We would be happy to help you in this exciting journey and ensure that you launch a successful fundraising strategy. Please feel free to contact us if you have any questions or need guidance.