According to research, 90% of startups fail. Of this number, 29% of startup failure is due to running out of funds. The irony here is that there are several funds available to startup founders from venture capital funds to grants.
But do they know that these funds are available and do they know how to get them? Here are five ways founders can raise venture funds to scale their business:
1. Understand why Venture Capital Funds exist: Venture capital is a type of financing that investors provide to startups that are believed to have long-term growth potential. The investors get equity in the company, and, thus, a say in company decisions.
2. Assemble a core team of advisers: Venture capitalists want to see that you have a
brilliant team that is committed and knows the market. Show potential investors how experienced your core team members are across the board.
3. Build a pitch deck and present: If you’re hoping to raise money from a VC, a solid pitch deck will be your calling card and the starting point of most introductory meetings. The deck can share insights about your product or service, business model, market opportunity, company funding needs and your management team.
4. Master the VC term sheet: A term sheet is “a non-binding listing of preliminary terms for venture capital financing,” per the dictionary. CB Insights refers to it as “the first real piece of paper a founder sees from a VC when they decide that they’re interested in investing.”
5. Complete due diligence, and close the deal: As a founder, you can increase your
chances of closing a deal with VCs by preparing well for due diligence. You can also get familiar with the reasons that deals often go awry and take proactive steps to encourage a close.