If you are engrained in the startup world, you are familiar with the term boot strapping. Most individuals attempt to build their companies from their personal money or even the small revenues that come from the initial stages of the business itself. It is a tough road for many until they have received or attracted sound investment something startups always look out for.
Thurgood Marshall said it best, “None of us got where we are solely by pulling ourselves up by our bootstraps. We got here because somebody – a parent, a teacher, an Ivy League crony or a few nuns bent down and helped us pick up our boots.”
This quote is very telling of what happens in the start-up world. Businesses grow through an enabled support system, let it be collaboration, sharing of spaces, networking, mentorship and even attracting investment.
Boot strapping to attracting capital can be a painful and lonely journey especially if you don’t have the tricks to make the process easier while navigating the challenges of building a successful business.
Recently at the #BuildFriday event hosted by our FutureLab, startup founder participants shared their experiences on how to navigate boot strapping to attract Venture Capital.
We share takeout’s from the conversations below.
Always be Prepared.
Get the fundamentals right before pursuing Venture capitalists. Often, many young startups take for granted what’s required to attract investment. Keep in mind the fundamentals such as bookkeeping, company registration, tax compliance, business strategies, etc. are always important to investors. These are some of the things they always look out for when evaluating your worth.
Tip: Most times investors don’t invest in the business but in the person; so how prepared are you with your strategy and pitch?
Financial Management
Building a business most times means you are stretched financially in the business. It’s therefore important to be nimble about how you spend your money when building a startup. Spend when you must and find alternative ways to execute with minimal or less money.
Product validation
Many start-ups always fill their product is always the absolute best and are quick to move to mass market before testing and refining the product. Time for many will always be of the essence but always TEST your product in the market. This should guide us in looking out for new developments for growth.
Data Validation
Investors are very much interested in data when it comes to decision making. Always ensure your data is accurate and validated before presenting it. You want to avoid a scenario that makes you appear dishonest before your potential investors with inaccurate data.
Test your business model
Understand how your company is making money or how it will make money. What are the projections using the selected business model? Does it make market sense? Is It sustainable? Understanding your projected revenue streams and how to articulate them clearly to investors will certainly get you points.
Know Your Customer
Keep track of your clients. Understand what their interests are and their aspirations. Know the one KPI that keeps the client awake and build solutions to solve his or her challenges. Find something that prompts the client to put you in front of their board members.
Communication
Your messaging should speak to the needs of a client. If you don’t speak the same language, chances are you don’t understand their needs which may lead to lost opportunity. Always strive to be on the same page with your clients or partners.
Honesty
When building a company, you will always encounter setbacks. When this happens, it’s always best to be candid and straight forward with the clients during such moments. Find a way to collaborate on solutions with clients to be able to meet their needs right from the start of a project.
For more tips on how to move from bootstrapping to attracting investment, visit our FutureLab Team at Innovation Village.
To participate in the next Build Week activity, register via https://bit.ly/BuildFriday
