In a world where the way we work and earn our living has changed dramatically—work-from-home, gig workers, freelance, etc.—wanting to start a business of your own is not unusual.
However, before you jump on the startup bandwagon, you need to understand that various aspects of funding will play a critical role in ensuring your business takes off.
Since we are talking about a new startup, we would like to start with the first level of funding you will require for your small business idea to take off.
What is seed funding?
Seed funding is the capital you require to develop the idea or concept you are planning for the business. Often, the concept or business idea is only a seed and needs to be nurtured to discover if the idea is viable as is or needs to be developed further before being launched.
In many cases, startup founders have brilliant ideas but are unsure of their viability and do not have the funds to develop them further. Seed funding is used for product development, market research, and hiring some core people to work on the business idea.
In most instances, seed funding is in the form of savings from promoters, contributions from friends and family, bank loans, or investments from angel investors.
How do I get seed funding?
As discussed above, seed funding can range from minimal investment to a huge outlay of capital, depending on the project you aim for. However, since developing the business idea can take a long time and the returns can be delayed, it makes sense to avail of seed funding to make it sustainable.
Here’s how you can pitch for seed funding
Define the idea
Many of us have ideas and while they can be exceptional, they may not be commercially viable. It is crucial for you to define the idea in terms of business, practical usability, market demands, and commercial aspects. For instance, launching a product or service could be bad if your idea is excellent but expensive for the target market.
Have a business plan
However great your idea is, having a well-detailed business plan is crucial. Many startups do not give due importance to this aspect, leading to issues convincing their audience about their business viability. The business plan must feature the ROI, the sales projections, and the cost aspects.
Minimum viable product
When presenting your business concept, people respond more positively when they have access to a prototype or MVP. The prototype will also act as a feedback mechanism where people can use it or consume it to provide you with refinements as required.
Keep networking
As the founder of a business, you need to emphasize the product and profitability. However, ensuring that you network across various forums is equally important. A network of prospective investors is the ideal way to go, but you need to go beyond that and ensure positive exposure for your business for technical aspects, recruitment, consultancy opportunities, and more.
Practice and refine your pitch
Your idea could be excellent, numbers may add up, and the market is ready for the concept, but if you cannot pitch the concept to your potential investors, the idea may not take off. Ensure you practice your pitch to your close group of trusted people to get feedback and refine it before you pitch it to your potential investors. Refining your pitch will also help you plan your marketing messages.
Leave no investment avenue untouched
It does not matter how far-fetched it seems, make sure you pitch to all those avenues that may be interested. It is about ensuring that you have covered all possible potential investors. Whether it is angel investors, banks, or other financial institutions, bidding passionately to get their investment interest is crucial.
Invest yourself
In other words, you can always bootstrap to work on developing the product or concept to ensure that you have a workable product or service to offer. But be aware that putting in your own funds has both benefits and pitfalls. The benefit is that you retain control over the product and your business and the pitfall is that if the concept is not marketable, you will lose all the money you put in.
Your search for seed funding does not end here…
Regarding seed funding for your startup, you should persist in your efforts to get the investment. You can also seek like-minded partners willing to work with you on your business concept, investing their time and money.
Keep researching the possibilities of taking your concept to market and explore alternatives like crowdfunding or even a small loan to build the concept. However, if you feel that doing so can be risky then carry out a cost-benefit analysis to ensure that you are not missing out on any of the aspects.
Keep watching this space to learn about the dos and don’ts of presenting your case for seed funding, playing to your strengths while making your pitch, and more.
