Startup funding is crucial to its sustainability. This funding can support the startup in several things, including developing products or services, expanding markets, and increasing the team's size and capabilities.
The most popular form of funding comes from venture capital (VC) firms, primarily because access to bank loans or conventional financial institutions remains challenging for startups with not much track record. Venture capital is a form of private equity financing provided to startups and high-growth potential companies.
Melisa Irene, Partner at East Ventures, explained the crucial elements that founders need to consider and prepare when seeking startup funding from VC firms. She gave her advices in the #SELASASTARTUP webinar on November 3 2020, with the topic "Young to Innovate: Start Your Startup Now". Check out Melisa Irene’s recommendation that has been summarized below:
1. Market validation before fundraising
Prioritize market validation before seeking funding. Have a solid understanding of your market size, competitive landscape, financial projections, and business plans. Validate your product or service in the market and clearly define the problem it solves.
2. Understanding the VC perspective
VC firms carefully evaluate market size, growth potential, and competitiveness in specific industries. Each VC has a different industry focus, so it is essential to tailor your business plan to match their criteria.
3. Refine your pitch deck and practice your pitch
The quality of your presentation and your ability to convey ideas dramatically influence the first impression with VCs. Create a concise, visually appealing presentation that focuses on critical points. Be prepared to articulate your vision clearly, confidently, and passionately. Anticipate common questions and have well-rehearsed answers.
4. Building relationships and network
Expanding networks and connections is crucial. Indonesia's digital ecosystem offers ample opportunities for innovation and collaboration among startups. Utilize these platforms by attending industry events, conferences, and startup competitions to connect with potential investors and build your reputation. Approaching founders already funded by VCs and researching compatible business models can aid in coming VCs.
5. Solid business plan
Develop and demonstrate a strong business plan with precise revenue projections and feasible strategies to reach key milestones. Showcase a deep understanding of financial aspects, including operational costs, customer acquisition expenses, and realistic return on investment (ROI) projections.
6. Team and execution capability
Highlight the strengths and expertise of your team. VCs invest in both the idea and the team executing it. Showcase your team's capabilities, experience, and commitment to manage the business plan effectively.
Securing VC funding is just one step in a startup's journey. Choose investors aligned with your vision and can provide valuable guidance and support beyond financial backing. By following these tips and preparing diligently, you can increase your chances of securing the funding you need to launch your startup and thrive.