Raising venture capital for your tech start-up? Unfortunately, raising funds requires more than just a great product or service. Before tech start-up founders even consider pitching to investors, there are a number of key considerations to be made.
Sydney beauty-tech start-up FLAYR raised $500,000 dollars in seed capital to drive Australia-wide growth and better deliver at-home beauty services. CEO and co-founder of the Australian beauty-booking service, Subhaga Amarasekara, shares her five tips to give start-ups the best chance of securing investment.
1. Hack an initial product together with some traction from customers.
If you can bootstrap a product together, it shows that you have tenacity, creativity and perseverance. Investors understand that start-ups are extremely hard, so having these qualities shows that you can quickly and cost effectively test your assumptions in the market.
2. Show investors that your idea will happen, with or without their investment
Once you have a bootstrapped product, showing that you will continue with the business with or without the investment is crucial. Investment is needed to help scale the business faster than continuing on your own.
3. Articulate clearly how big the market size is for your product.
Potential investors want to know that you are shooting for the stars, so you need to show clearly the assumptions you have made to determine the market size of your product.
4. Have a clear mission.
Investors understand that the product your pitching is most likely not going to be the final product that helps you scale, but having a clear mission will steer you in the right direction.
While the value of the start-up may seem obvious to them, ideas and products must be backed by clear goals and objectives. When defining financial goals and objectives, it’s important to ask yourself the following questions:
What do you want to achieve with this funding?
How will this funding allow you to accelerate growth and drive innovation?
How much funding does your tech start-up need to be successful?
5. Show how your team’s skills are complimentary but not the same.
Investors know that you cannot build a business all by yourself. You need to be very good at identifying your strengths and weaknesses and hiring people to compliment your skills and build out a well-functioning team.