Few of the Facts & Mistakes to avoid in the process of Raising Money (based on my personal experience over the years):
- It takes around 3 to 18 months for the entire process to happen i.e, from the time of placing application to getting the amount credited to the account
- The funding efforts has to start early as it helps you from being desperate.
- It costs time, effort and money to raise money
- If you show desperation, then the funder feel that if you are not able to manage your process of raising money, then you may not be in a position to manage your business.
- Please understand the investment required with back up logic for the same.
- You need to do Cash Flow forecast properly to know how much you need to the penny.
- Understand and know your Business Plan thoroughly.
- Show some sales to Raise Money. It shows that your business is definitely going to work. It shows that you have a viable business.
- You have to bootstrap initially to generate some sales first.
- Social proof : No. of subscribers, engagement you have on Facebook page, number of emails generated, number of views on your channel, traffic to your website etc.
- Try to gather Letters of Intent from your customers. You need 3-12 of these letters.
- You will get Letter of Intent if they like your product / existing relationship/ actually intend to buy your product.
Please never tell a funder that there is no risks associated with your business. It shows that you are novice in your business.
- You have to say what initiatives you are undertaking to minimize the risk.
- Manage you Bank Manager if you want finance later asking for advice, share your vision, discuss plans etc.
- Have your credit report clean.
- If you are able to get good credit (i.e, in terms of limits along with no. of days) from your suppliers, it really works well with the funders. This may be established with relationship and payment of bills in time.
- Funders want to see that you invest your personal money, you have your own stake.