Checklist for starting fundraising for your new venture

Checklist for starting fundraising for your new venture

From Kashif SEO

When you plan to establish a startup, you will have to grow your business ahead. Hence, in most cases,

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When you plan to establish a startup, you will have to grow your business ahead. Hence, in most cases, you will need capital to do many things. A bit later, you will also need to raise funds to run the entire business, even when it is in its nascent phase.

So, in this article, you can check out the checklist you must go through to raise funds. If you wish to give stakeholders and venture capitalists an idea of what an application will look like, you can develop a software prototype and an MVP.

1 - Ensure you have all the technical documents:

As you plan to seek funds from venture capitalists, you must spend some time developing numerous documents. Such documents encompass everything related to software development, from system architecture to functional and technical requirements. The prime objective of creating such documents is to present the plan to build the software from a technical perspective.

Moreover, the technical documents should be clear and concise and should show that the software is a solution to the common problems users face. As you're about to manage a startup, a technology partner might be the best option to handle anything that comes his way. When you want to scale up the business, a technology partner will support you in the best way.

2 - Make sure you have a prototype for the software:

While you set your goal to design a particular software, developing a prototype for the software is essential. In simple terms, a software prototype will reveal the strength and weaknesses of an idea. It will also enable the team to develop a solution before it implements on a large scale. As the product development journey commences, it will help to discover what you need to improve to use the product well in real life.

Eventually, when you present the software prototype to venture capitalists, you can prove that individuals will be eager to use the application. But, before you proceed in presenting the prototype, you will have to test it thoroughly with real users. Conducting different tests will help you gain insights into how to alter the various features.

3 - Consider developing an MVP

You should consider developing an MVP. If you don't have an MVP, the investors will not be sure about the product results in a real scenario. On the other hand, when you have an MVP, the investors will be completely aware of what your team will develop in the future, and they will also be confident about how you will monetize through the software.

Besides, the investors will be sure that you will be able to grow the business and generate revenue. Apart from everything else, an MVP will give the experience of perceiving something tangible. Later, as they observe the product, the investors decide whether they must support the idea. In a nutshell, when the investors observe positive results at the MVP level, there are greater chances of receiving the funds.

4 - Ensure whether you have financial statements:

When considering the financial statements for fundraising, you should check if you have profit and loss statements for a period. In addition, you must also have the year-to-date statement when you're seeking funds during the middle of the year. Presenting the balance sheet is also essential when you get in touch with the venture capitalists.

Further, it's also vital to show documents for annual projection. If you don't have this kind of document, then the VCs will not be able to comprehend how you're thinking ahead. As you cover the expenses in the documents, you have to consider the marketing, administrative, research, and development costs.

Through the financial projections, the VCs will get a clear idea of the expenses for research and development. They will also be aware of the various aspects and whether the gross margins are reasonable.

5 - Check whether you have a pitch deck:

As you try to raise funds, a pitch deck is one of the important documents your company has to develop. Whenever you present the pitch deck, it should elaborate more about your company. Make sure you present the pitch deck well so it can inspire investors to know more about the project and the company.

As far as the flow of the pitch deck is concerned, it should impress the investors and represent the business narrative. The brief presentation should give an idea about the story of your business. Once the VCs observe the journey, they will decide whether it's worth investing in the company. Most of the time, you must present the pitch deck to elicit some interest from the investor.

You first have to focus on the story you want to tell to create a fabulous pitch deck. Apart from the problems that your customers face, you have to show that the software is the best solution. Subsequently, you must always remember to present financial data and numbers that take the VCs through the entire story.

6 - Make sure if the company has a business plan:

To secure funding, it's crucial to develop a business plan. When you think about a business plan, you will later have a clear idea of how to make the business idea succeed. With the plan in mind, you will also be able to achieve long-term and short-term business objectives.

Eventually, when the investors go through the business plan, they will be sure whether the business expansion will generate sufficient money to run the company. They will also be able to foresee the future and if your company will be capable of fulfilling debt obligations. While you create a business plan, you should state the executive summary carefully. This summary provides an overview of the project and covers the overall strategy in detail.

 

7 - Be clear about how to approach the VCs:

 

Soon after you have prepared a list of VCs, you need to come up with a strategy for approaching them. Initially, you must find the right VC ready to give you funds. Ensure that the investor has a good experience and an outlook towards investment.

 

If you meet an investor for a short period, you will have to fine-tune the elevator pitch. When you approach a VC, you must not be dishonest. To gain confidence, you should never use ridiculous figures without a proper justification. In addition, you have to present the financial statements in detail and try to negotiate while closing the deal.

 

Summary

 

To sum everything up, there are many things that you will have to check for raising funds. In addition to technical documents, you should be ready with the software prototype. An MVP will also enhance the chances of obtaining funds from investors. In the end, you must prepare a pitch deck and a business plan before approaching a venture capitalist. You also have a strategy in your mind when you're about to approach VCs.

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