The advancement in technology and the “Aatmanirbhar Bharat” culture has given rise to the establishment of several Startups in the last few years. The market is ever-evolving and people’s needs change frequently. It is no surprise that even as a “start-up” you have to be quick to adapt to change. But before that, you have to lay a stronger foundation for your business to build on after. The most important thing to get a start-up running is funding.
With a plethora of startups in the market and funding options, an entrepreneur needs to know what exactly will make his business stand out and be certain that it will receive external funding. If you are looking for the answer to the above-mentioned question, your quest ends here. We bring you some key points to keep in mind while building your startup and preparing to raise funds!
1. Idea Validation
If you are looking for your business idea to be validated, then you should be ready with a detailed document on your idea of the start-up. You should then be documented with a deep-rooted understanding of the target group, what they expect in a product, their lifestyle pattern, etc. A few concerns you should include and be able to address:
• Opportunity: what opportunity do I have to create from the available resources/what opportunities can I provide as a startup
• Solution: Will my product be a solution/help to my target audience
• Community: What are the customers, influencers, employees that I can attract with my start-up. Their feedback can also help you make amends.
2. Building your MVP
Building an MVP (minimum viable product) is the most cost-effective solution for actually building a product or service without spending tons of money before you offer it to the target market. It is a demo of your actual product that you can release to a smaller audience and get some honest reviews and feedback that you can use for your benefit while establishing your business. Testing your MVP not only helps you mitigate the risks but also helps improvise on your idea before you can move to the Beta release and finally release your offering in the market.
3. Market Fit
Your product must be a fit for the market for you to sell your product and make a profitable business. If there are too many competitors, fewer buyers and thus no opportunity, then it would not be an ideal choice to compete in that market or launch a similar product. It is important to ask yourself a few basic questions to know if your product fits the market :
- How is my offering unique from my competitors?
- Do I have a business model that will allow me to run a profitable startup?
- If I still wish to go ahead with a similar idea, can I offer a differentiated product that solves problems faced by my targeted customers?
- Would I buy it if something similar was already available?
Market Fit is all about analysing the trend and incorporating the market reality in your offering that will make it more realistic for your target audience. Thorough R&D is a must, and this can be done through surveys and questionnaires. You can conduct surveys through LinkedIn and Facebook and analyse the results before you introduce your product to the market.
4. Unique Selling Point (USP)
The USP of your product is the essence of your business, it is what makes your product stand out from its competitors. If your product is your USP, then it cannot be copied, for this, you must make sure that you file all the necessary patents and copyrights. However, in such cases where your idea can be replicated, it is crucial to make sure that your entire team along with the execution and product experience is so unique that it is a plan of your brand DNA that cannot be copied. Your positioning and communication can be a part of your USP that helps your customers in understanding why your product is superior and different from other market offerings.
5. Risk Mitigation
Another important aspect of the journey to securing investors is how can you as a startup mitigate all the possible risks. Startups usually deal with a ton of data, right from product research to market analysis. Startups must ensure proper data management. It is important that all market data you procure from surveys and other consumer data are secure and are not leaked out. Other than this, it is crucial to make sure that all your patents and copyright documents are in place to avoid any sort of legal issue or plagiarism in the future. You must ensure that every aspect of your project is legally back and is averse to any kind of risk that may drive investors away.
6. Investor readiness documentation
After you have planned the niche of your business, the market it performs in and all the product-related details are laid out, then comes the time to create a pitch deck for your investors. Your pitch deck should be crisp and not lengthy but also provide your potential investors with all the details you have penned out after tonnes of research and brainstorming. Your investor pitch must include the product life cycle and the road map for the different phases of your product. Apart from this, the pitch should have a detailed mention of your business model, marketing strategy, how you upsell and cross-sell the products, the consumer segments, journey and their retention. Lastly, the kind of investment you are looking for and how you plan on utilizing the money.
7. Reaching out to investors
The last and final stage for funding is reaching out to investors and getting the money to your business. A lot of people usually try Bootstrapping or self-funding for as long as they can. When you invest your own money, you are tied to the business. At a later stage, investors consider this to be a plus point. It helps you to get a higher valuation in the next 2 years, where the focus is to increase the community and user base. Usually, startups break even after their Series A funding through an Angel investor or VC funding, however, if you have not broken even you can always go for a Series B funding or an IPO. At least 26% of your company should be up for your first IPO offering. Having said that, listing your startup requires a lot of pre-IPO preparation. You need to turn your startup into a brand, and to do this you need to make sure that you market yourself through various PR and Branding strategies for people to know your brand. To successfully register your brand as an IPO, you need the right investment banker to help you register and understand where to list your company. (BSE/NSE)
By Mr Leenesh Singh, Co-Founder & CEO, 10000StartupsIndia