Startup founders often dream of the landmark billion-dollar valuation to turn their fledgeling idea into a giant, but a sure short way to becoming a unicorn needs a different approach than the playing field.
The global start-up ecosystem has evolved from the times when app-based models like Uber and Airbnb could get you on the map of serious venture capitalists and investors. With the maturity of the mobile-based business approach, the first-mover edge is no longer available today in most cases.
This makes having the billion-dollar dream more of a wish that a serious reality for most fledgeling startups today. So, in order to get investors interested in your startup idea and identify with its potential, you have to have a strategy that’s out of the box and sets the investors in awe.
The tricky part of becoming a unicorn is being able to gather major funding early on in the start up’s journey. Cajoling VCs and investors to shell out handsome backing isn’t easy, even for a novel idea which is a breakthrough concept. Then how does one entice investors? It’s all a part of a carefully paned out brand investment strategy, that adds to the company’s valuation – intellectually and physically – all along the way.
How to know which part of your business idea will stick?
It is a proven fact that major rewards are linked to the major risks taken. But for an idea at a nascent stage, the risk to reward ratio for investors is shaky. With an unproven track record for return, a startup will need to convince the investors of big dreams.
Components that click are inherently linked to the technology being used and the smooth-lining of operations, which builds confidence in long-term forecasts. Then there is the talent at disposal. Having visionary and quality talent on your rolls right from the start inspires confidence.
The technological side of the investment allure
VCs and investors are sceptical of infusing cash in immature technologies. Artificial Intelligence startups suffered from this wariness till recently. Similar perception problems cluttered machine learning and big data in the start.
Blockchain and its by-product cryptocurrency still struggle from inhibitions of long-term viability and vague potential benefits. Based on cryptocurrency, a whole digital ecosystem came up and fooled investors and stakeholders with phoney ICOs.
Instead, investors look to identify the viability of the technology in justifying the business model. They look at the upfront and continues investment needed by the technology, how it aids the physical chain of the business model and where it serves efficiency: be it feedback loops, continuous improvement, and continuous delivery.
Waste as little time as possible when raising funds
The longer you wait to raise the initial round of funding, the longer your business idea goes without enough resources. It also slows down your rate of progress and drives potential investors away. Add to this the toll that presenting your business model and baring it up for scrutiny before investor after investor.
It’s the most tiring step of being a start-up founder. Founders spend a lot of their initial time tirelessly explaining their concepts to investors and convincing them that their spending will transform into returns.
It is important to land investment, but equally important is the clarity to explain to the investor how it will be spent. In this, it is also important to land an investor who is interested in the kind of technology you are using. You might not know who will be the actual investor.
But basing your search for investors should be in line with your strategy, approach and technology framework. Narrowing down on investors with a history of similar investments or interest in similar fields will help gather funds quicker and more effectively. And sharing the same ideology also helps with keeping the investor satisfied and on the same page about the future of the company.
Have astounding hopes from your projections
Funds in a start-up range from small seed money round to bridge working expenses to massive million-dollar investments to expand infrastructure and operations. And all types of funding need different approaches to woo investors.
It is true that one needs to carefully map out valuations, to not be bigger than their own head. Making a start-up a credible business needs large cash infusions to remove roadblocks and amp up operations. And the investor knows this in most cases.
Also, you need to have a clear picture in your mind of the progress of your business idea. From baby steps to initial market expansion, to phase two of maturity, the phase of geographical expansion and exploring new markets and finally the plan forward from when the idea is reaching its potential or stagnating in resonance in the market.
Carefully planning your investment roadmap is crucial to becoming a firm contender for money infusion when sitting in front of investors. The right approach to investment building is a stepping stone towards the billion-dollar dreams and eventually stepping out of the start-up boundaries towards an IPO.
By: Chitresh Sehgal, Senior Editor, Dkoding Media