Seeking Funding? Investors Want to Know How You Spend the Money

startup funding

Do you own a startup? Is there an emergent need for funding to establish your business in the competitive market? If yes, then make sure you have a just answer for the most common question fintech companies ask, “How do you plan to spend the money as we invest in your enterprise?” To get the master plan ready here are some pointers in which you should focus on.
The money game
Entrepreneurship doesn’t come by easily. You will have to know every bit of the business. Make sure you are well versed with the capital requirements, the operating spend, and the necessary funding. Try and keep the processes clean and streamlined instead of spending more on manual processes to keep costs low. If you are seeking funding from a bank, prove to them that your company has good scopes of return, shows signs of growth, is capable of handling financial obligations, etc. You should also highlight your debt repayment plans when seeking fund help.
Your experience
Venture Capitalists (VCs) and Angel Investors eye around for your (entrepreneur and management team) experience. They appreciate a high-performance track record in existing as well as prior ventures of the company or its team. It can turn to be a win-win situation if you could convey your company’s commitment and passionate efforts to the investor.
The business model
One reason for the failure of a business is its inefficient business model. Put in your efforts to make a profitable business strategy. Showcase your existing business model to the investor to let them understand your financial issues and scopes when the business would turn more profitable. You may consider customizing the business plan before you confront an investor.
Competition is relatively high in today’s market than it had been ever. Consequently, investors determine whether your product or services are unique and have the potentiality to make the investment worthwhile. When seeking funds present them all detailed information about the products and its competitive advantage over the market like distribution relationship, exclusive licenses and marketing plans.
Another thing that attracts investors is state-of-the-art technology stressing on customer experience. This is the reason why deep tech firms face lesser struggles in raising money from investors than other companies do. Hence, companies should consider scaling up their technological standpoint. This, in turn, would generate more business awareness and return on investment (RoI).
Stable customer base
Customer acquisition is the most important part of a successful business. While VCs concentrate on significant growth and market competition, the Angel investors are keen to find out if the company is making products or providing services for the huge target market. They are likely to opt for companies that have a stable customer base (which implies a large target market). Therefore, your business model should clearly show the operational spending that you intend to use to create a stable customer base. Investors do become a part of your business family as they share the risk of failure equally. So, it is not unjust for them to think twice before handing over the funds to you. As a startup entrepreneur, you must assure them that their money would be used to empower various aspects of the business and will not go in vain. Only then it will be the start of a healthy investment venture!

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