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Raising Funds for your start-ups
There is isn’t any guideline as when a start-up should go for funding, but having said that there are certain parameters which need to be cleared. As every product or service has to undergo the test process of having requirement in market. This gives clarity the demand for the product or service, this will also help you in understanding the supply aspect which you need to keep in mind.
Once when you feel you are ready to hit market with either your product or service, test of time and acceptance is the next milestone which needs to be justified. This qualifies your start-up that what idea your team or you had conceptualized in virtualization is now confirmed with real time aspect of generating revenues.
Apart from revenues it also gives you real time feed back as to understand the changes, requirements and modifications to product or service in simple language you need to know the depth of water in which you are swimming.
Once having passed it becomes easier to raise funds as you can also justify the sales forecast by real time experience.
Taking a call to go for funding or still keeping it in wraps and extending the survival time period or gestation period is fine but at same time it shouldn’t be too long that some other company comes in to picture and take things.
Next comes the question of finding investor, the first thought should be who all people you know personally have the ability to invest and at same time you also need to shout loud that you are looking for funds there is nothing wrong in asking for funds. In basic language A mother will never feed its kid until and unless it cries giving indication its feeling hungry.
The same thing implies here too, also this should be the time to prepare business plan to justify your need in black & white. Also remember just pumping in funds with you into the company and thinking let’s not raise funds why give stake it all sounds negative, remember for launch or take off more fuel supply is consumed.
Also have clarity in asking for funds, it shouldn’t be too big which your existing revenues cannot justify. For e.g If you are booking revenue of 12 lakhs for 1st year asking 30 lakhs is justifiable but asking 2 crores will not be looked in by investors.