5 important tips to secure start-up funding
As investor activity in Australia rises steadily, it can be the opportune time to contact investors and secure the much-needed capital for your business. Here are 5 ways to help you secure funding for your start-up.
1. Find other entrepreneurs
Even before you embark on the journey to create something new, it is a good idea to attend workshops, conferences, investor pitches and meetings to train yourself and get the experience of working in a start-up.
As start-up activity is scattered around the country, it may be worthwhile to take up space in an incubation centre to work in close proximity with fellow entrepreneurs and have the benefit of experienced mentorship.
2. Use your contacts
Time is money, so refrain from cold calling investors, as it will only waste your time and effort. With years of experience behind you, pull out your contact list and find a referral once you zero in on the investors you are going to approach. You have a much better chance of being heard with a warm introduction behind you.
3. Make personal connections
Contrary to popular advice that finding an investor is purely a numbers game, many successful entrepreneurs would advise you on finding a connection with interested parties. Thorough research on the interests and preferences of each investor you’re targeting can help you reach out to them in a more personalised manner. Business is more fun when you enjoy it and finding shared interests with potential investors can definitely make the relationship more fruitful.
4. Preparation pays off
Your pitch is about your idea and how you’re going to sell it. You have crafted a great story that connects with the investors’ hearts and minds, and guess what, they want to know more!
Questions are a good sign, but only if you are well prepared. Do not leave the revenue model and exit strategy for the due diligence stage. Be prepared to be quizzed about numbers. In the end, investors want returns, so prepare well to show them what they will reap from their relationship with your company, and what will they get when they eventually pull out of it.
5. Start-up investment opportunities are everywhere
With the start-up ecosystem continually strengthening; there are opportunities to secure start-up funding everywhere. Recently, HashChing, a FinTech start-up in Australia, secured $1 million funding from Sapien Ventures, a new VC firm backed by Chinese investors, thanks to a chance meeting.
When the CEO of HashChing ran into tech entrepreneur Victor Jiang at an event, he impressed Jiang with a cold pitch about HashChing’s unique business model offering pre-negotiated mortgage deals to Australian property buyers, securing an invitation to make a formal pitch.
HashChing is the first Australian firm to secure funding from Sapien Ventures. The process ran into 6 months and required a lot of patience and a thorough representation of the business model, traction and the utility of the product in the market.
As you embark on the road to create a successful dream, remember that failure is an acceptable part of the journey. Failure is the biggest teacher and every successful man learns from things that don’t go as planned. In case you are not able to secure funding for your start-up in the first go, critically evaluate your business model and evolve to offer a better deal that investors cannot resist.