Guide For Fund Raising
Things to keep in mind for fund raising apart from readyness in terms of product, process and customers following documents and details are required by investors to assess the investment opportunity. Below list is not exhaustive as well as not mandatory but this makes it easier for startup and investor to take this to next level,
Concept note/ pitch deck (Should provide for following information)
- Problem statement and solution
- Brief on business and legal entity of business(company)
- Update on product/services
- Brief on promoters
- Market size, target audience, positioning and competitive landscape
- Revenue model
- Cost of project and means of finance
- Detailed financial projections for five year
- Valuation report (available if any)
- Last three years audited financials or in case of new business past financial from date of incorporation to current date
- Last six months bank statement
- Incometax/Indirect tax/GST returns for last 1 year
- Business related liscenses
- Copy of key agreements undertaken by business
- Copy of testimonials by your clients
- Product demo during meeting
- Corporate/Product brochure (if any)
- Break up of quarterly revenue last three years (segment/product wise)
Startups fails miserably when they go for fund-raising to the investor. This article is published with purpose of sharing knowledge on “what start up can do before meeting investor?”
- Assume you are investor and this came as opportunity to you for investment: Before going to any investor, startup should check their own business plan assuming they are sitting on investor side, would they invest in this business or not ? Like how much one thinks before buying product of 100$, think about what all investors will look when they invest million dollars. This will help startup to understand what all gaps or risky area which needs fix or answer and also to focus on their strength while presenting pitch, which will increase probability of getting funded.
- Have discussion with close friends and relatives: It is fine to have open discussion with friends to get their opinion on this, they might come up with something that you might face from the investors and when it comes from investors you are already prepared for it. Idea is not to buy their point, idea is you know about it and you have answer ready for it when you face investor.
- Discuss with your co-founders and senior team members: Many a times founders don’t leverage on perspective of senior team members, this is not to say that there is no good communication channel. Team members are ignored saying that its not their forte. Your key team members are best people to give perspective on where investment is required for ground level business process which needs fix when business is scaled up. Divisions head will come out with their divisions fund requirement which will save cost or optimize the process for their divisions and create value for your business.
- Check out your operations and processes: Till the time there is no investor, everything is run on non documented process and verbal communications, it is fine to save on time and cost in the beginning. Point here is to highlight that investors are just financial partners and they believe in documented process as they are not getting into day to day management, they expect it be in place.
- Check out updates of competitor: If investors come to you with name of competitor in almost same business with good market share and you don’t know about the them, I guess you are half way done for investors. Ideally you should know about their revenue model, broad level strategies, their strengths and weakness from publicly available data at least.
- Justify your quantum of funding requirement: Do you need full amount which will ensure optimum utilization of funds and plan of spending already in place ? This question will help you to instill confidence in investor mind in term of your preparedness post funds raised. Investor will feel like i have to write the cheque as complete plan is ready for spending including vendors also identified. No investor would want idle money lying in bank accounts.