Many startups are able to bootstrap their ventures initially, but eventually, they'll face the critical decision: Should we raise investment and if so, when and how?
There are no simple rules for raising capital. There is a variety of investor segments with different resources, expectations and propensity for risk. Startups need investment at different stages and for a range of different reasons. The first step, therefore, is to align the expectations of all stakeholders involved in the capital raise.
Here are 10 tips for raising capital at an early stage in New Zealand from our experience of working with startups:
- Ensure you have a well-defined business model and evidence that it works and is scalable
- Start planning for investment at least three months before you need it
- Build the credibility of your business and capability of your team (e.g. add an Advisory Board)
- Work on maximising the value of your business prior to seeking investment
- Research the investor market and find investors that match your needs
- Think beyond the funds – how can the investor(s) bring value to the business
- Define very clearly why you need investment and how it will be used
- Prepare your investor pitch and get feedback on it from professionals before you pitch
- As the founder or CEO, don’t expect your first investment to pay your own salary
- Consider crowdfunding and government grants as part of your overall capital plan.
For more comprehensive advice on how you should go about raising capital come along and hear from an expert at this ecentre seminar.