This is a guest post by Innovate UK, the UK’s innovation agency.
Scraping together the finances you need for your start-up can seem like a laborious process, no matter which stage of the funding cycle you’re currently in. Significant financial backing is essential to the long-term success of any business, and is a core factor in both expansion and development.
Luckily, we’ve plenty of hints and tricks to keep you in the know and help boost your efforts. Adopting these tactics could help your chances and gain you that vital funding. Whether you’re simply looking to know what’s best for your start-up or wondering how to target potential investors, we’ve got everything below in our guide to start-up funding.
Understand Your Funding Stage
The first priority is self-evaluating your company and determining which stage of the funding cycle you’re currently in. Ask yourself questions as to the status of your start-up. Is your product far along the development process and are you earning profits from your services? Being aware your position will help navigate you toward the types of funding you should be eyeing. Be sure to show an awareness of your funding cycle stage. It’s essential that potential backers see self-reflection and evaluation.
Explain Your Funding Motives
You’ll need to have an extensive understanding of what’s required of each funding stage. The type of funding you request will need to be appropriate, in line with your targets and ultimately realistic. There’s no point in asking for amounts that are above your means! Ensure that you show investors a clear, specific need for investment, and provide proof of where their money is heading. A strong direction and well-constructed pitch will create a confident impression.
Get Clued Up About Your Targeted Investors
It’s always a good idea to investigate, understand and establish who you’re potential backers are. You’ll also need to be aware of the general behaviours and risk appetites of investors. Knowing how they differ at each stage will optimise your chances of grabbing that important cash, so be sure to get clued up! Having a better understanding of which approach to take will also help to give you a rooted sense of how your start-up is perceived by outsiders. Your current progress, business milestones and financial needs will all affect which types of investors will be interested. Be aware of who you’re appealing to, what’s suitable and what you’re asking for. Miscalculating and asking for too much or too little could damage your chances.
Select the Best Time to Pitch
Make a note of each different section of your start-up that needs expanding and additional development. Discovering what you need to do in order to move onto the next funding stage will help to determine when the best time to ask for investment is. Successfully timing your requests will aid you in reaching long-term goals in a sustainable manner. Maintainable growth is paramount when keeping your start-up alive for the long haul!