India is 2nd largest startup ecosystem in the World after USA and 3rd largest in terms of Unicorns. Does this mean setting up a startup and getting investments is easy? Not at all!!
Staggering 90% of Startups fails within first 5 years of it’s operations. It is because of lack of innovation, mentoring, funding and product – market fit. This is not to discourage you but good to know facts before anyone venturing in to.
Good news is that if you are a startup founder or an aspiring entrepreneur then I would recommend you to go through below aspects to succeed in securing funding and building valuable partnership
1. Idea Validation
The majority of the startup founders have one thing in common – they love their idea and very passionate and attached to the solution they are bringing in the market. They can’t wait to tell investors how their idea will change the world. However, most of the entrepreneurs fails because they love their idea so much that they do not validate whether their idea or solution is needed in the market. Do people really in need of the product/service they are offering? Will customers ready to spend penny on their product/service?. It is very important to develop Unique Value Proposition of your idea.
I went to my 80 year old grand father and explained my venture. He readily acknowledged and told me that this a great idea and he can help with funding although he has no knowledge on startups. Similar approach you need to take by talking to your closed one and strangers for their genuine feedback.
2. Identify right Mentor
This is one of the most overlooked aspects of Startup journey. And it’s sad because mentoring is one of the critical aspects of successful startups. So it is important to identify right mentor who can ignite new thoughts in you, show right direction and hand hold you in your entrepreneurial journey. Trust me this will give extra miler to your success rate and give you new perspective altogether.
Either you can search in social media sites (such as LinkedIn etc) or signup with the likes of MentorAlly who has some of the best industry experts, and investors as mentors.
3. Revenue first and Investors next
Money is the fuel for any business. If you are venturing in to something because you are passionate but you yourself not sure how to make money out of it then it’s not worth venturing in to. That will be NGO not business.
I connect with lot of budding entrepreneurs and one predominant questions everyone asks me is how to get my startup funded. My simple advice to all of them is that strengthen your revenue streams, grow your customer base first before even thinking of funding. Ultimately it’s customer who will pay for your product/service and without paying customer, how much ever someone invests in your idea, you can’t survive in longer run.
Investors are very keen on your revenue streams and paying customer base before investing in your business.
4. Define Key milestones
For any startups to be successful discipline and persistence is very important. In order to maintain the composure you as an entrepreneur needs to define key milestones to achieve. A minimum of 12-18 months of goal sheet is necessary. Milestones should be real and measurable.
Investors are very keen to understand your measurable goals and how you are going to deliver against those timelines before thinking of investing. Know what those milestones really means and how will you track the progress. A typical investment round usually runs for 4-6 months and a good entrepreneur achieve key short term goals in this period which will help to build confidence in your potential investors.
5. Understand competition landscape
Unless you have a path breaking idea (patents) you need to understand your competitors thoroughly. A good research on your competitors will give an edge while interacting with investors.
6. Develop your Team
Having a right combination of team is very important for a successful run be it a sports team or a business. I would give high rating for having a strong team. To run a successful venture hire someone who has better skill sets than you who can complement you and bring the right balance.
Based on my interactions with various angel investors and VCs, investors give high importance to the TEAM behind any product/service. Some investors are even reluctant to meet if the startup is run by one man and chance of getting funded also bleak. So start working to build a great team from the beginning.
Please post your questions if any on comment box. I will do my best to answer all of them. Also let me know if you want me to cover any topics of your choice which may be helpful.
Happy entrepreneurship Journey everyone.
In my next article I will take you through “How to approach an Investor”.
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Co-Founder & CEO, MentorAlly
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