Money will keep your start-up progressing, it’s as simple as that. In an ideal world, it would be easy to secure funding. But, this can prove to be the most difficult stage for any start-up. To try and help maximise your chances of success, here are some essential tips to start-up funding stages.
Know Your Funding Stage
‘How mature is your product? Is it still a prototype, for example, or is it ready for commercial use? Do you have customers and revenue? These are the sorts of things that define where you are in the business cycle and hence what sort of finance you might be looking for.’ Graham Oakes, Founder, Upside Energy Ltd
The typical start-up funding cycle is:
- Concept stage
- Early stage
- Later stage
- Initial public offering (IPO)
When we’re talking about securing funding, it’s important to know where you are in this cycle. How mature is your start-up?
Be realistic about where you are in the funding stages!
Reassuring potential investors that you know where your start-up is in the cycle is essential. Showing self-awareness will make you seem like less of a gamble.
Remember, you’re trying to attract investors. So, demonstrating a good understanding of your start-up and what funding is needed will make your business seem like a safe bet.
In the early stages (concept/pre-seed/seed) it can be difficult to secure funding. For investors, this is when your start-up is seen as a bigger risk! Government start-up grants, like those from Innovate UK, can provide the investment you need in these early stages.
Be Clear on What Your Funding Is For
‘Pitch a crystal-clear proposition and vision with personality and passion, and back it up with a realistic valuation to attract investors.’ Luke Lang, Co-founder, Crowdcube
Make sure you’ve clearly laid out how your requested funding amount will benefit your business. All the money you ask for should be justified!
Map out your targets and explain how the funding will be appropriate.
The funding cycle usually includes:
Prove to investors that you have a clear idea of this cycle and that you know what direction your business is going in.
A good pitch will give you the best chance of securing funding!