Quickest And Easiest Way to Get Seed Funding

When starting a new business or venture, the first problem you face is capital. Without any capital, it gets difficult to get your ideas to run and your business is at a higher risk for failure. But, not everything is hard because there are several people willing to invest in the correct company. Without a doubt, getting funding is not as simple as it sounds, it can also take a lot of time. In this blog, we will discuss what seed funding and seed money are and how they are beneficial for entrepreneurs.

SEED FUNDING

The initial costs for any business can be very expensive. It depends on the kind of business, but it is correct to say that the lists of possible expenses for a budding business are plenty. For instance, funds are needed to renting space or put down a deposit, buy or lease expensive equipment, or hire staff.

Most likely, your business will fail if you don’t get external funding. Seed funding, also known as Seed investment or Seed capital, is the initial round of funding a business or company goes through. The aim of this particular round is to make sure that the company looks inviting and attractive enough to investors to gain more funding in the future.

STEPS TO GETTING SEED FUNDING FOR A STARTUP

RIGHT TIMING

The first step in the journey of funding is to understand and determine if the timing is correct and if you require seed funding at all. The first factor is whether you want to give up a stake in your company. The second factor is whether you can meet the criteria of an investor and convince them that you are a great investment.

To convince potential inventors to make a deal, you need to give them evidence of the following details:

• PRODUCT – you need to make sure that you have your most hardworking player in place, and be able to show some kind of initial customer approval and product growth.
• MARKET – you will need to indicate serious market potential, and explain how your product and services will fit the requirements of the market.
• TEAM – investors always want to know if you have a strong team of professional and talented workers who can implement on introducing a product in the market. You need to show them that you have the correct people for the job.

SELECTING YOUR FUNDING TYPE

There are various ways to get seed money, each of them has advantages and disadvantages.

• VENTURE CAPITALISTS – venture capitalists or VCs are particularly built to provide funding to different companies. This route of funding is often controversial; many but not all VCs like the idea of funding, these investors are very thorough, frequently requiring many stakeholders and meetings.
• ANGEL INVESTORS – angel investing is one of the most common kinds of seed funding. Angels are rich and wealthy people who invest in beginning-stage startups using their own capital, unlike venture capitalists who invest the money of other people. Getting seed funding from angels is usually a quicker process without a lot of due diligence. However, they sometimes expect a sizeable equity cut in return.
• FRIENDS AND FAMILY – various companies get seed funding from family members and friends. This does give you a lot more flexibility as far as the terms go. Instead of treating it as an equity trade, you can consider it as a loan. This kind of funding can very easily become a recipe for disaster because it carries with it the issue of mixing your personal life with your business life.
• CROWDFUNDING – this famous alternative is gaining a lot of popularity, there are sites that help hundreds and thousands of founders and owners to launch their startups. It usually involves forming a crowdfunding campaign constructed on pre-sales of products and then persuading many donors to invest in your product before it is introduced in the market. If you raise sufficient money then you are able to construct the product and satisfy the orders of every initial investor.
• ACCELERATORS AND INCUBATORS – These are enterprises built to help and assist founders with the process of growing a company and launching.
• BOOTSTRAP – bootstrapping is putting your own capital up as investment or simply depending on any business profits to reinvest in the forward development.

UNDERSTAND HOW MUCH SEED MONEY YOU REQUIRE

Investors don’t like to know rough estimates, so you need to be very sure as to how much funding you will be asking for. Generally, you do receive sufficient funding to reach profitability, depending on the kind of startup you are, for example, software-based startups get enough funding as compared to companies producing physical products because of the production costs.

PREPARING TO APPROACH INVESTORS

In order to feel comfortable, investors need to see the evidence of future successes. Sometimes investors want to see a more tangible plan of action and financial expectations. You must prepare a pitch deck and chief summary that includes the details of your company. From company logo and name to your long-term goal. Investors need to know about the persona of your customers, revenues, profits, expenses, utilities, product development costs, your team, etc. They want evidence so that they can easily put their money into your startup.

FORMING A LIST OF POTENTIAL INVESTORS

You will need to connect with a lot of potential investors; getting seed funding is a very exhausting procedure. Make an ideal investor persona and track the kind of investors that fit the bill. Prioritize and score the most important investors who are likely to invest in you.

MEET WITH INTERESTED INVESTORS

Meeting investors is a skill that is only refined with time. There are a couple of vital rules to follow when meeting potential seed investors.

• KNOW YOUR AUDIENCE – understand and know your customers and investors and why they tend to invest.
• SIMPLE PITCH – short, simple, and to the point always wins the race. So make sure you discuss only the most vital information.
• LISTEN CAREFULLY – be attentive and listen to what the investors are saying, not only a way of learning but also a sign of respect and building mutual trust.
• TALK ABOUT YOUR DREAM – discuss your goals with investors but make sure you have your facts and figures backed up.
• BALANCE BETWEEN HUMILITY AND CONFIDENCE – you want investors to see that you have faith in your idea and are a capable founder, but don’t be over-confident and arrogant.

FINAL DEAL NEGOTIATING

As the investors are more experienced, negotiating might get a little tough for many founders. It is best to take your time and not jump to the first offer you get. Even though you do not want to waste any more time, it is worth waiting so you get to negotiate on elements such as compensation and equity.

CONCLUSION

When it comes to beginning a new business, there are various factors that you need to look at for funding. To get a startup running on the right track, the best way is seed funding. It provides founders with a strong base and decreases the stress around the workspace, employee salaries, and unexpected problems in the growth stage.