Startup founders, at most times, seek to be funded through marketing their business ideas to funding institutions. These funding requests sometimes succeed, and their companies receive funding, but at other times, they fail. The entrepreneurs, mostly the ones requesting funds for the first time, have different hurdles to overcome through the application of different skills to gain the attention of the investors in funding the company. This article focuses on what works, what does not, and what the investors and funding companies look for from the time they make their very first contact with an entrepreneur seeking support.

The first step is making sure that you, as the entrepreneur, really need the funds. Various reasons are good enough to make a startup not seek any outside funding. The biggest three reasons are; raising money could lead to dilution, takes a lot of time, focus and energy, and lastly, it requires perfect timing. The time and energy used in seeking funds could be instead used to develop and build out the ideas, products, and the company as a whole. About dilution, your business concept will only be seemingly investable when the idea, team, and product attain the quality that the investor sees as good enough. There is also a possibility that the idea could be turned into an MVP (minimum viable product) to generate a quick bunch of revenue. If the startup does not have the investors, the advantage is that it will get to keep a lot (if not all) the equity. The real money lies in the equity, and therefore, this is the biggest reason not to involve the investors as much as possible. Finally, timing is vital; when you are ready. If all the thoughts are not well thought out, it is more likely that you will turn down a venture capital. There is no much thinking involved after signing the term sheet; you will be busy executing the ideas. What is important to keep in mind is that funding is never sought to build a product; it is raised to finish it. The money is raised to own a market, but not to find one. The money is raised to repeat the sales process over and over again, not for the purpose of developing one.

The next useful thing to do is avoiding ‘spraying and praying.’ Every investor or a funding firm has a thesis that they do not mostly stray very far from. If you do not get a response from the investors, the reason could be that you have set your target too widely. If you want to present your pitch to the investors, ensure that you design it according to their focus and requirements to avoid wasting their time. Carefully consider the thesis before contacting an investor, as they are after a fit. They do not just write a check, they will also do some advising, connecting, and other things that will help in the success of their investment. Most of the deals mainly get passed on because they lack the needed fit, which includes stage, timing, geography, sector, business model, and others.

Being unshakeable on handling the key problem that your business will try to solve, and also be firm on handling your customers, competition, and the industry you intend to disrupt. You should have a better understanding of what drives your business before presenting the idea to the investors. You should be able to present a compelling proposal and not just pitching for the sake of pitching. In your presentation, you should be able to show how the solution you are presenting is competitive and unique; you also ought to know where its flaws are. The issues that are mostly the weak points of a pitch are the competitiveness of the target market and partnerships that should be developed for the company to be a player in the market. Instead of explaining the possibilities of how your product can be a game changer, talk about how the product is a fit in the market.

Another challenge is putting together a great team. The quality of the leadership team is the biggest factor for any pre-revenue startup. The startup needs intelligence, background, passion, and motivation. The repeat entrepreneurs are more favored by the investors as they have more understanding of the making, sales, and the growth required by a startup. Your team should include a person who understands the above things and how they happen in your target market. It is possible for one person to embody all of the above qualities, but it is rare. Therefore you might need more than one person. Intelligence is also a necessity as startups involve a lot of thinking and inventions, and also making vital decisions with valuable little data. The team you bring together should have the ability to decide and invent without blinking. Motivation is needed in being able to have a 100% focus on the startup company as a lack of focus will see it plummet quickly. Money alone cannot be the sole motivator for a startup; the team has to love what they intend to do, or else they will not do it; it needs passion.

After ensuring that everything is right – that is, an excellent team, amazing ideas, and a promising opportunity- what another issue can hinder a company from accessing an investment? It is a spending plan, which is mostly described as using the funds in a strategy that is detailed and well thought out. What shows that a company is ready for investment if the spending plan is right? An investor has a lot of different ways to turn you down, he can even use a maybe, but the last and the most heartbreaking one is when you are told to come back after some months, and the investor will see what you have accomplished. The one thing to keep in mind, again, is that you are not raising funds to turn an idea into reality; you raise the idea to bring a near-reality startup to a substantial return. You need to detail a path that includes on a timeline a detailed post-investment, and breakdown in which every dollar has been accounted for.

You could have an idea that has the potential to take the world by storm, but if you do not present it well enough to the investors, you will not obtain the proper funding. Raising proper funds bridges the gap between a great business idea and its implementation. The pitch you make is the thing that has the potential to either raise the business of the ground or sink it. To capture the attention of the investors and holding them to remember your ideas, develop your pitch into a story. Ensure that in the story, you cover all areas that could raise questions to make sure that the investors get all the information they want. Choosing the right audience is fundamental in getting successful funding. After you get to know the interests of your investors, design an appealing presentation. Set your business’ goals and objectives and include the period.

During the preparation, use a simple language that will be easily understood. Using a complicated language does not add any benefit as most entrepreneurs believe. A good pitch is that which explains the objectives of the business and how the funding being sought would help in expanding it. Using a simple language simplifies the understanding of the pitch, therefore increasing the chances of being funded. A good pitch should be understood even by a kid; it should not be very long and should include all the essential details. In short, it should be simple, concise, and straight to the point.

Setting strict timelines and including them in your pitch shows that you are serious about getting funds for your venture. Set deadlines for yourself and acknowledge the investors about them, as businesses are required to operate on deadlines. If you are a new entrepreneur and have started recording sales, mention it to the potential investors. Ensure that the answers you present to the investors are well thought of to prevent a mess. During the presentation, you should be courageous, as you want to get the best from the investors. Let the investors know that the funds will unlock a potential that will make the business flourish.

A first-time entrepreneur seeking to receive funds for his company could either succeed or fail depending on his presentation, that is, the pitch he presents to the potential investors. The first thing to consider is if the business needs the money because if not, the time and energy used could be focused on other vital aspects of the business. The next thing is to know your audience and designing a pitch that is a perfect fit for their thesis, that is, their requirements. Have an excellent understanding of the problem you want to solve, your competition, customers, and the industry. Put together a great team that has the necessary background, motivation, intelligence, and passion. Create a spending plan, set deadlines for your business, and have a simple yet incisive pitch. A successful pitch is aimed at convincing an investor on how his funding will help you to achieve your goals and have the investor willing to invest in your company. Having a truly compelling pitch is all about delivering what the investor needs.