What You Need to Know About Raising Startup Funds
When starting a new business, at some point you’re probably going to have to raise funds for it, and if you’re like most of us, you haven’t a clue as to the sort of questions you’ll need answers to, both for your business and for your potential investors.
Rather than head into the process floundering, it’s helpful to at least know what some of these questions you need answers for are, if for nothing else than to help you get serious about your responses.
7 Questions that need answers for startup funding
How much capital do you need? – Having a clear idea about how much capital you will need obviously simplifies the task a great deal. Examine what your costs are going to be, and understand that it always costs more!
What are you willing to give up for this money? – There will be a price to pay, and you need to know beforehand what you’re comfortable giving up. Whether that’s an equity position, or a simple return on investment, know your numbers and stick to them.
When do you have to pay it back? – When are you expected to repay this investment? Are the terms you’ll receive conducive to running your business while doing so? How much strain will this produce on the business?
What’s the growth plan? – This is a key factor your investors and you should both be interested in. Together with the growth plan a time frame is needed.
What are you willing to risk? – Are you willing to put up equity (other than sweat equity) in your startup? This can sometimes make things easier for others to see their way clear to invest.
How much input do you want? – Making it crystal clear from the start how much outside input is welcome is a good idea. Many investors want nothing to do with this, but there are others…
Can you name your target audience? – Having the ability to clearly identify your ideal customers is a comforting sign to prospective investors. It goes a long way toward helping them see that you really do have a handle on your business!