Funding & Investors - Prepare Before You Ask for Funding

Have you ever considered the similarities of the Olympic Games and startup businesses? Before an athlete ever has the chance to win the gold medal, they must train and work to make it onto the Olympic team. This is comparable to a startup business seeking funding and investors in starting a hedge fund and is willing to back up their efforts of developing and marketing a product. Every startup needs some source for external funding. If you had enough money to support the entire startup of a business, you would have enough money to settle down into comfortable retirement. Obviously, the purpose of starting a business is to create a potential for making money, so this is never the case.

How do you best approach investors and hope to win a spot on the Olympic team, so to speak? Preparation is your key to success. Before considering where to find funding and investors, you should understand where your competition stands. This means knowing what all other startups who are seeking funding are up to. By observing your competition, you can learn from them. There are often events put on by organizations that allow startups to present their products and business plans. Since these meetings are generally open to anyone, you can attend to see what your competition is up to.

Startup proposals are often given to a panel of judges comprised of angle investors and venture capitalists. The focus of these meetings is either on seed funding and investors or later-stage funding through private placements. The most informative portion of these meetings is the five to ten-minute post-presentation question-and-answer session. Write down the questions asked and what the main focus seems to be. During this Q&A, put yourself in the position of the investor. How would you respond to the startup's presentation? If you were an investor, would you fund them? Pay attention to why you feel one way or the other and assess how your presentation would look. Sculpt it to form a good impression.

Consider the fact that most investors have been in the industry for years. Some may even have experience with prime brokerage firms. They tend to begin to predict which startups will succeed and which will not, which is how they determine who to provide with funding. As the old saying goes, ask for funding and you will get advice; ask for advice and you will get funding. Glean from the wealth of information available to you about funding and investors to build relationships with investors and increase the chances that you will receive much-needed funding.