Introduction

Raising money for your company is one of the most important tasks to accomplish in order to put your name out there. Approaching investors can be a daunting task, especially to young and inexperienced entrepreneurs. This article gives us an insight into what to keep in mind while raising capital.

1. What are the forces behind fundraising?
The forces behind fundraising are usually driven by the investors. They try to mislead you into giving up more of your company than you want to.

2. Do not fundraise unless you need to
Unless you are in a position where you absolutely need to raise money to further your company’s goals, then do it. It is not possible to fundraise while giving half your attention to the process.

3. What’s the first step in fundraising? Introduction to your investors is the first step in fundraising. Getting to know your future partner is key in acquiring their money. Being friendly and polite is the first step in fundraising.

4. How do we determine your position in the negotiation?
Looking at the investors actions rather than words will help you know where you stand. Always end a conversation by establishing the starting point for the next one.

5. Securing the first investment
The biggest drive for an investor is what other investors think of you and your product. Once the first investor commits then the floodgates are open.

6. Be sure to have different plans
Most often than not, you will be talking to multiple investors at once. You should keep in mind that each investor requires a different form of convincing, especially between those who are looking to invest low and high sums of money.

7. Knowing when to take the deal
Founders sometimes get an acceptable deal but refuse to take it in the hopes that they might get a better one. This is a big mistake which costs a lot of companies.

8. Retaining your company
Be careful to not sell more than 25% of your company in the second round of talks, since you will be giving away around 10 to 15 in the first phase.

9. Knowing when to quit Stop fundraising after you have got enough.
This will be better for your company in the long run. You should also know when to stop if you can’t raise anymore.

10. How do we communicate to investors?
The best way to communicate is to do it politely. Although some investors like a touch of arrogance, the safest way is to be nice.

Conclusion

Fundraising is not going to guarantee success. It is just a way to help you become successful. Laying the foundation and doing groundwork is the best way to succeed. There are some who can prosper even without fundraising because their ideas and commitments are solid. In other words, do not rely on fundraising as the core component of progress, rely on your own abilities, hard work, talent and most importantly, your colleagues.