Funding your Startup? Take a step at a time!
No one’s waiting to make an investment in your startup just because you have an exciting out-of-the-box business idea! Harsh as it sounds, that’s the reality! Startup funding doesn’t come easy…it’s a tough nut to crack. Seasoned investors will always expect to own a portion of the business and wait for huge (mind it…not just good…huge) returns on the investment they’ve made. This can certainly add to stress of an already hassled entrepreneur. Then again, if funding was so easy, wouldn’t everyone jump onto the ‘starting a startup’ bandwagon?
While there is no hidden formula, here’s some wisdom on fundraising from three of our bright entrepreneurs, all of who have recently raised funding for their ventures.
- Chalk out a plan of action
“Timing is key” says Srinivas Potukuchi, CEO and Founder of Glowship – a one-of-its-kind online marketplace for energy and environment related products. “You have to have a correct time frame…prioritize your conversations…be it with family and friends during the seed funding process, or angel investors during later stages.”
“The first funding that any startup usually receives is from friends and family. Later on, it is best to get investors who understand the sector you are operating in and can therefore appreciate your problems and add significant value to the company” he added.
To this Arpita Kapoor – founder of Mech Mocha Games and a recent winner of the prominent female Indie award at Casual Connect Europe – added, “at a little later stage in the company, when you are looking for new investors, the sure shot way to find them is to get back to your old angel investors and they will in turn help you make connections and raise your next round of funding via their networks”. Mech Mocha Games creates high quality character-centric games for casual gamers.
- Do your homework
When it comes to angel investment, it is important to go with investors who have been around in the investing business for a while and have a proven track record of investing in start-ups. Lokesh Makam, Founder and MD of Barrix Agro Sciences, adds, “an investor should understand the dynamics of the sector you are in…half your work is done when you have an investor who understands your business and the sector.” Srinivas’ additional comment on this was, “Know the people that you are fundraising from…save time, energy, cost!”
- Start the hunt
- Seed funding is your own savings/money from family and friends that you pool in…also known as bootstrapping. Srinivas inserts, “Friends and family who understood the sector were able to appreciate it better. This is the best way to ensure that the identity of your company remains intact in the initial stages. Having a proof-of-concept is a good idea. I embarked on fundraising when I had a group of concepts in place.”
- Angel funding gives you that additional leverage over your seed capital to allow your business to stand on its own feet. Arpita says that meeting only relevant investors is key. Do not waste your time.
- Venture capital is for companies that are already well into their business and are looking to expand.
According to Lokesh, “startups should concentrate only on their business and growth plans. That the entrepreneur has conviction in his/her idea matters a lot. Do not follow money alone; work hard and money will follow. Tackle one vision and activity at a time.”
- Get a network system in place
Often the best way to receive funding is the good ol’ way of networking. Attend workshops, boot camps and events that help you not only understand how funding really occurs, but also the various parameters, types etc. 10 different investors will have 10 different perspectives on you and your business. Do not be disappointed by the feedback you get. Attend events to meet relevant people…advisors, investors, mentors, fellow entrepreneurs. If you cannot be part of a seed accelerator program, try networking through events, social media, seminars and much more happening across cities each day.
- Be prepared
Before you delve into asking for funding, you will have to argue your case to the investors. Like Arpita says, “Ready your pitch. You know your business strategy best…no one else has a better understanding of it. Know your goals and know the people you are talking to.” Even if the feedback is negative, don’t lose hope.
Getting funds together for your business is no rocket science. With the right fundraising strategy in place, and by making sure you have a winning pitch, getting funded isn’t that complicated. Are you ready to start? It’s time you leave your fingerprints on the world…what say?
About the Startup Founders
- Srinivas Potukuchi is the CEO and Founder of Glowship. Glowship is a unique, first-of-its-kind marketplace for energy and environment related products, solutions and services. The Glowship marketplace platform carries a wide selection of high quality products from leading manufacturers sold by authorized merchants at very competitive prices. Srinivas started his career with ITC as a Management trainee where he developed strong competencies in Manufacturing, Operations & General Management. Srinivas has an undergraduate degree in Chemical Engineering from IIT Madras, India, and an MBA from Stanford University USA.
- Lokesh Makam is the Founder and Managing Director of Barrix Agro Sciences. Lokesh holds an MBA degree in Pharmaceuticals Management and has over 14 years of experience in field. Barrix Agro Sciences seeks to develop technology enabled cost-effective solutions to reduce the use of pesticides in crop production, thereby increasing pre and post harvest yield. Barrix Agro Sciences has served about 15,000 farmers and sold around 50,000 traps in 16 districts of Karnataka, Andhra Pradesh and Tamil Nadu.
- Arpita Kapoor is the Founder of Mech Mocha Games, a company that creates high quality character-centric games for casual gamers. Her venture is part of the iAccelerator 2013 batch from CIIE, IIM-A. Arpita had done her Higher Secondary at DPS, VasantKunj, Delhi and graduated from Indian Institute of Information Technology and Management, Gwalior. She was a previous International Game Developer’s Association Scholar and was the Technical Consultant for DIGIT Magazine. She previously worked on the game APOX as a Graphic Programming Intern for Blue Giant Interactive.