Risk financing is an excellent solution, not only for startup owners who wish to develop their business, but also for investors aiming at making money.
However, when young entrepreneurs actively seek funding, considerable mistakes can actually cost them a lot.
So, what is needed there for inexperienced startup owners to know in order to “earn” their future? Let’s look at a few important things.
– Ask for the money you need. Not a lot more
One of main issues that experienced business owners suggest is that as a young entrepreneur you should ask investors for the actual money you need and not for a lot more! Having a lot more money in your hands can be “frustrating” for you and your founding team. It can be a reason for some serious problems.
– Look for investors who can really understand your business case!
Before you ask for an appointment with an investor or a seed fund, make sure they understand your business case. For example, if you have a startup with software useful to hardware developers, make sure the investor has the technical background or the team that understands the issue. It will be a waste of time for both sides if the investor does not know what you’re talking about.
– Ask investors from your area first or relocate your business!
You should first look for investors from the area where your business is based. These people will know the exact legislation issues for funding procedure, they will understand taxation matters and they will know the right people in the region or in the country to help you. This means that once you agree you will be able to get the money much quicker and they will also feel they can do business in a more convenient way for them. On the other hand, if you wish to attract investors from another area or country (i.e. the U.S) you might need to relocate your business.
– Don’t forget the executive summary
Of course, you should have a business plan when you present your business case but, it is more than necessary to also prepare a separate executive summary, presenting your company, your team and your mission! It creates a very professional profile for you.
