What you need to know about raising startup funds

by | Jun 22, 2015

When starting a new business, at some point you’re probably going to need to raise funds for it, and if you’re like most of us, you haven’t a clue regarding the types of questions you’ll need answers to, both for your business and for your potential investors.

Potential investors will want to know your answers as well, and rather than head into the process unprepared, let’s help make you more ready by listing at least some of the important questions you’ll want to have answers to.

7 Questions that need answers when seeking startup funds

How much capital do you need? – Having a clear idea about how much you need obviously simplifies the task a great deal. Evaluate what your costs are going to be, and keep in mind that it always costs more!

What will it cost you? – What are you willing to offer for this money? Is it going to be shares of your company, and how much is that? 10%? 25%? This is something you need a firm grasp on, and at least initially not be swayed from.

When does it get repaid? – What is the time frame for this initial investment? Have you got enough time to pay the capital investment back, using either a fixed repayment plan, when you sell the company, or more flexible options.

What’s your business growth strategy? – You and your investors will be quite interested in what your plan for growth is. Not only is the plan of importance, but also the time frame for growth.

What are you willing to risk? – Are you willing to put up equity (other than sweat equity) in your startup? This can sometimes make things easier for others to see their way clear to invest.

How much input do you want? – Making it clear from the start how much outside input is wanted is a good idea. Many investors really want nothing to do with this, but there are others…

Who buys and uses your product or service? – Who is the ideal customer, and how do you intend to market to them? Having a firm grip on your eventual buyers calms many investment fears!