12 Steps To Raise Capital For Your Startup

12 steps to raise capital for your startup
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about:reader?url=http://yourstory.com/2016/02/raising-funding-startup/
yourstory.com
12 steps to raise capital for your

startup
Uday Nair
Raising capital can be argued to be a fundamental act of any

organisation more so for any startups. Often the founder of these
startups spends most of their time, energy, and efforts in developing
strategies to attract funds and in the process to approach angel
investors, venture capitalists, attending conferences (to promote
their business and with the intent of impressing some key
individuals to join their organisation as an investor). These founders
spend many hours pondering over an approach by endlessly
refining their business plans with the hope of procuring some
capital. However, it is not as straightforward as few may think.
The prime intention behind this essay is to empower startups to
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rethink their game plan, develop strategies and go out into the
market with the right attitude and a fair amount of structure that
could enable them to identify their potential investors and provide
them with what they might be looking for in a prospective
investment-worthy venture. There are 12 steps that need to be
looked at by budding entrepreneurs, perceiving these steps as a
guide upon which they could engineer their capital acquisition
strategy. However, I would like to argue that these 12 steps are not
exhaustive, because there is never a tried and tested strategy.
Every game is different and every players react differently in the
field.
Step 1: It always starts with an Idea. Having an idea is not
enough to attract funds. You will need to dig deep into your idea,
breaking your idea into parts with the intention to identify what is
unique about it. What solution are you providing and to what
problem? You will have to find out what is your Most Unique
Feature that helps you stand out from others. Once you have
identified it, try to define it in a couple of words and that becomes
your Unique Selling Point. Use this to develop your elevator pitch,
starting what is the problem, what is your solution and how is it
unique? All summed up in less than a minute.
Step 2: Transform words to a prototype. Now that you are able to
define your USP, try to develop a prototype around it. When I say
prototype, it is not necessary that it has to be a finished product
sample. You could take that unique feature of yours and put it into a
PowerPoint, Photoshop, or draw it out on a piece of paper, so that
you could show it to your potential investors. Investors like to see
things that aretangible. And also you could develop a small
animated video about how your product and the key feature of it
works out to be (could be as simple as a flowchart).
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Step 3: Take an outside perspective (sampling). Once you have

your prototype, see if you can test it/do a bit of reconnaissance,
which means go out see what others have to say about your
prototype. When I say others focus on your prospective
customers. Take a good proportionate and a representative
sample of it and try to record their experience, this will help you in
developing a market research report, that will come handy later on.
During this step, see whether your customers are able to make
head or tail of it. Also try to identify the reasons why your
prospective customers will/will not see themselves using this
product/solution that your company is providing.
Step 4: Develop a functional prototype. To many this could be
considered as the most difficult and challenging step that you may
encounter in your journey to raise capital. Transforming a pictorial
prototype to a functional prototype is not a cake walk as many
would agree with me here. However, the intention is not for you to
develop a full-fledged product, just try develop that one unique
feature of your idea. Try to develop it by seeking help/support from
your friends, friends-of-friends, anyone and everyone who could
help you. If you can try to black box your product idea and get
pieces of it done from different people. This is essential to protect
the Intellectual Property of the idea, bearing in mind Ideas are no
ones monopoly. You could also go for the signing of a
Non-Disclosure Agreement (with an anti-conflict clause) between
yourself and the developers. Having said that, if you could develop
the functional prototype on your own or with your partners, there is
nothing better. But this is a very tricky ground, so trade carefully.
Step 5: Customer acquisition (traction control). This is the next
difficult and challenging step getting traction for your product. In
order for this, make use of all the weapons available in your
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arsenal. From Facebook to Twitter to YouTube to sending out

emails to writing blogs to newspaper articles (through connections)
to TV (if you can afford) to partnering with other startups and having
a launch party, etc., spread the word around as much as you can.
At this stage, the intention is to acquire your potential customers a
good chunk of your total customer base. Sadly, however, even after
all this, you were unable to acquire a good number of customers,
dont get dis-heartened, go back to the drawing board (Step 1)
re-evaluate, re-define, re-engineer, and re-start. There is seldom
any company who got everything right in the first instance. This
step will challenge you mentally, physically, and monetary wise so
be prepared for it.
Step 6: Monetising strategies. By now you would know for sure
that your idea has legs and it has walked a long way on the on the
shoulders of your unique feature attracting customers. This means
that now you can think of developing a business model around
your feature, which means identifying ways to generate income
from your idea. This is the point from where your idea moves along
a continuum to become a business. Herein you should be able to
identify who your primary, secondary, and tertiary stakeholders
are. Now these stakeholders will start to play a role in your
business at different levels, impact of these stakeholders could be
through, for example, fiscal policy, monetary policies, state
regulations, excise, HR rules, and many more. Hence, it becomes
important to account them into process of developing monetising
strategies. In this step you work on monetising your concept looking
at different parameters and negotiating your way through different
obstacles (beyond your control) and still make profit out of it (if not
profit at least breakeven). Upon implementing these strategies, you
could procure some funds that would allow you to move on to the
next step.
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Step 7: Scale your product/solution. By now you will have

traction and cash coming into your bank account from the previous
steps. So now it is time to move beyond boundaries with the aim
of spreading out your wings. In order to do that you will have to
scale up your product accommodate wider usage (e.g., server with
large space, etc.). And by this step, stage is set for you to approach
your potential investors with the right numbers knowing how much
money you need, for what, where it has to be spent, and what
would be the ROI of it. And like that a lot of factual answers to
some obvious questions. SO the time is perfect to develop your
pitch.
Step 8: Create a pitch. This is the stretched out version of your
elevator pitch developed in Step 1. Herein you could create a
simple presentation describing the product/ feature set, results of
your market research (developed in the previous steps),
highlighting the numbers coming out of the traction levels, market
size and where you fit in the market. The team behind (very
important) investors not only invest on the idea but they need to be
convinced that they could trust you and your team with their money,
business model or the monetising strategy.
Step 9: Finding the Money. Once you have developed your pitch,
find investors using the local Angel network, through LinkedIn,
approaching the local University incubation center, joining any
accelerator programme, any personal contact, attending Expos
with your demos. You can also promote your product through
various mediums waiting for it to catch the attention of potential
investors but this is not very common.
Step 10: Delivering the pitch. Trust plays a big role in order for
handover of money to happen. At this stage you would want the
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potential investors to trust you. When you are finally in front of the
investors, try to showcase your sharpness, thoroughness,
diligence, and intelligence. Prove it to them that you are someone
they could trust. They dont expect you to know everything. Before
you head out to deliver your pitch be prepared to answer any kind
question, running a mock interview would be a good idea here. It is
quest so you may be directed from one person to the other, but
finally you will reach the right person at the right time. This is the
stage where you have only one purpose and that is to impress your
potential investors. But again this is not going to be very
straightforward, be prepared to face rejections and you might have
to do this with a number of investors before they go on to decide to
invest or syndicate with some else to invest in your firm, the
Eureka Moment.
Step 11: Refine your product. While undergoing the process of
finding investments, equal efforts have to be put in to constantly
refine the product, adjusting it to the changing internal or external
variables. In doing so you are increasing your chances to attract
investment, investors will not fund projects, wherein their funds are
being used for development or marketing, they would prefer to
invest in a venture at the stage of scaling. In refining your product
you could also be hitting the box of innovation and allowing you
stay in tune with the latest trend in the market.
Step 12: LionHeart. This is more to do with facing adversary and
every time you fall or get rejected you dust it off and start all over
again. Treat every rejection as a learning lesson. Every
entrepreneur has faced rejection. The question is quoting Rocky
Balboa here Its not how hard you can hit, but how hard you could
get hit? and stand back up.
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These 12 steps is just a guide. There is no foolproof plan that will

work every time and everywhere. What may have worked in one
country may not work in another. But the intention is for all budding
entrepreneurs to use this as a guide for your future endeavors.
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