How far in advance should you approach investors for startup funding?
When your business is still an idea in formation (as ours is), how far in advance should I approach investors and lenders for money? What should I do and put in place before connecting with potential investors?
Not a definitive time but think like the investor.
What value would they like to see in your product to make it worthy of investment? Have you got "skin in the game". Show how much effort? What are the $ for? What makes your product different and appealing to gain traction in the community. Show them this and either the tangible product or a prototype, or the service offering at the least. Show them what problem you are solving and why it's an awesome and compelling solution. Who are you competing against. If no competition, then why would someone want your solution if they are existing with no solution at all. When is a return on investment likely? What's your forecasted uptake? How did you work that out?
Just some thoughts.
Best of luck!
I would suggest that the issue of investor funding and your required levels of future equity should form a key part of your initial business thinking, planning and strategy and be detailed and factored into your plan and budgets.
Waiting until investor funds are needed is usually too late and the business risks stalling or failing.
Most investors are happy to be approached at an early stage of thinking, they have much to gain by investing in a winning idea and so they will most likely be prepared to offer help in developing your plans, speaking to banks and even bringing along other investors.
Early stage investors also make great business mentors or advisory board members often bringing on board many years of experience and knowledge.
Look at it this way....would you jump in your car and set off on a lengthy road trip without first checking you had the fuel and cash to complete the journey?