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DO's and DON'Ts of start-up funding

B&F BUSINESS PLAN DOS AND DON'TS OF START-UP FUNDING When it comes to raise money for their own start-up, entrepreneurs have a wide range of channels to choose. The risk is that they tend to exaggerate while describing the financial projections to any source of funding. It is important to remember to always be realistic, especially considering that the projections on the costs are usually wrong. So, here are some dos and don'ts to consider when you finally decide to raise money for your new business. Remember, 9 out of 10 new start-ups go out of business. DOS Consider what your possible sources of funding are. Normally, there are 8 WAYS to raise capital, as your business pie starts to grow: 3 Co-founder Family and friends Angel investors Venture capitalist 6. 7 8. Credit cards Early employees Investment bankers Crowdfunding Be prepared for the meeting with the investors that you have identified. Investors want to know about the people behind the idea, the idea itself and HOW and WHEN they will get their money back to Generally, angel investors together provide from $100000 $500000 to a new business Prepare a chronologically organised financial plan with key MILESTONES The value of a plan is measured in its implementation: set as many milestones as you can Present your plan to investors right before or shortly after one of the milestones to HIGHLIGHT the benefit of investing in that particular moment Angel investors created 106,400 newjobs in 2012 Create a feeling of exclusivity around your idea. There is a taste of prestige of being part of a group of first investors Active angel investors increased by from 2002 to 2011 59.2% DON'TS Do not exaggerate when it comes to present your business idea. Have a real business plan with cash flows and specific ROI projections ready. Show the investors you have done some market analysis SWOT analysis is one of the most used tools for market analysis Do not raise too much money:overfunding can be tricky Fundraising round should be a 4-6 month process * Do not present more ideas at the same time, you will give the impression of being confused and not prepared Maximum 3 pages of executive summary * Do not limit yourself to bootstrapping, the process of funding a business just with your savings:you will miss many opportunities 8 additional sources of finance * Do not go to a meeting with a potential investor without doing some previous research on his background:for instance, if this investor has already put his money in a competitor's business, it is unlikely he will fund your business. So do not waste time when you can easily save it with a bit of research Investors expect a return on their investment from 10 to 30 times FIND OUT MORE WITH B&F Business Plans

DO's and DON'Ts of start-up funding

shared by AliceBF on Aug 14
Do's and don'ts of start-up funding: a complete list of what entrepreneurs should take into consideration when searching for funding for their start-ups.


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