Ava Lee

How far ahead should we plan for funding to get the business started?

That is, when your business is still an idea in formation (as ours is) how far ahead should I approach people for money? What should I do and put in place before it's a good idea to connect with potential investors?

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2 Answers

Jessica McGrath

Jessica McGrath , Marketing Consultant at Stoke Marketing

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!

Jef Lippiatt

Jef Lippiatt, Owner at Startup Chucktown

I'd say additionally that you want to show that your product or service is being used. Record and track the number of people signing up for your service, the nu... read more
I'd say additionally that you want to show that your product or service is being used. Record and track the number of people signing up for your service, the number returning, the amount of money they are paying (1 time or recurring). If you have secured any agreements with businesses to use your product or service, mention that and the amount they were willing to pay. It has often been said "ideas are worthless". Why? Because an idea that is never implemented isn't making money therefore has no monetary value. Execution and implementation are both key. Be sure to differentiate yourself from competitors. Offer something different and meaningful that adds value to customers and can add to your bank account.
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Neil Steggall

Neil Steggall , Partner at Wardour Capital Partners

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?

Good Luck

Cheers,

Neil.

Lisa Ormenyessy

Lisa Ormenyessy, Business Coach and Marketing Specialist at Straight Talk Group

Great Advice and Spot on Neil "Early stage investors also make great business mentors or advisory board members often bringing on board many years of experienc... read more
Great Advice and Spot on Neil "Early stage investors also make great business mentors or advisory board members often bringing on board many years of experience and knowledge." Ava, consider outside advice from mentors/early stage investors etc as great navigators. Your road map may be able to be considerably shortened saving you both time and money and achieving your goal much quicker. Or dare I say it - they may also be able to save you years of pain from going down a road that leads to a cliff. The good news is that these types of people in the business community are generous with their advice and care for the enthusiasm of the start up entrepreneur. Good Luck!
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