If you are a first-time entrepreneur without a successful venture under your belt, seeking financing might not be the hardest part of starting up your first business, but it certainly won’t be easy. While venture capital investments are on the rise, first-timers won’t get a piece of that pie unless they can sell their business model and leave investors with a sense of trust and credibility. So how do entrepreneurs get financing for their first venture?
Tap Parallel Sources Simultaneously
Don’t just go after one funding source at one time. Putting all of your eggs in one basket is risky – a rejection may feel like losing your only chance at success. Instead, go after angel investors, venture capital, and even friends and family all at one time. Asking more people – and for different types and levels of funding – puts the probability odds in your favor.
Fund to Benchmarks
One of the biggest mistakes that first-time entrepreneurs (and even seasoned entrepreneurs) make is that they seek vastly more than they actually need to start up. Don’t try to fund the entire lifespan of your new business. Instead, set solid funding milestones. A startup that’s done the mental work of setting benchmarks is much more appealing to investors who are more likely to spend on a company with a clear plan of where it wants to be and how it plans to get there.
Avoid Simple Mistakes
You know what often gets first-timers denied funding? Simple mistakes in their business plans. Investors need to see that you know the size of your target market, that you have a sound and logical revenue model, and that you have a team that can carry through on your objectives. Check and double-check your business model for flaws.
Learn from Denial
If an investor that denies your pitch, take the opportunity to respectfully ask why they passed. You can learn from the rejection and use their feedback to make changes before your next pitch.
Once you’ve secured investments for your new business, it’s time to double down on managing your finances. If you need to make sure your books are done well in order to allow your business to thrive, contact us today.