“Most exciting phase of Start-Up journey is your first Funding Experience”
‘START-UP’ – how fascinating and exciting to even spell this word, isn’t it? A start-up is not just a new business but it is someone’s dream which they have been thinking through for months or years, turning into a reality. Hence that dream which turned into reality should scale up and create an impression. But unfortunately, not all the start-ups are a success story and most end up as a 100-meter sprint and close down within few months of operations. At this blog, I have put across few key ingredients for success and then stress more on how a good capital back up is important for scaling up a start-up to a Fortune 500 organization or a billion-dollar company.
The three major requirements of a start-up are:
1) ‘UNIQUE’ Business Idea
– Business Idea is the core of the business and it is the starting point. The business should be Unique; doesn’t mean it should be inventing something always. The uniqueness of a business idea could be from a/an:
- Innovative New product
- New Application of an existing product
- Solution to an existing gap in a market / industry
- Any other form that creates a competitive edge
2) ‘RELIABLE’ Resources
– The start-up will become a reality only through a well-planned execution else it stays as a dream. In the start-up journey you may rely on many resources to support realize your dream but the one which is so crucial is ‘Competent & Reliable Workforce – The Dream Team’. I have seen start-ups with not so great business idea succeed due to a fantastic execution and on the contrary, there are quite a few bench-marking business ideas didn’t scale up due to poor execution.
3) Funding and Capital
– Not everyone is born with a silver spoon. Capital is much needed to take your business to the next level. There are a lot of Funding Options:
- Crowd Funding
- Angel Investors
- Bank Loan
- Venture Capital
“Your business idea is always special and exciting for you but to obtain funding it should excite the investors to invest their money. That crucial role of bagging funding depends on a single document of 15-20 slides called the ‘Investor Pitch Deck’.”
INVESTOR PITCH DECK
A well written pitch deck will be crisp and clear explaining the value proposition, scalability of the business idea and also clearly demonstrates the revenue generating potential of the idea. In an Investor pitch deck, the following heads are so crucial but not just limited to it:
Vision should emphasis about the change you want to bring in an Industry or in a market or in a society. Vision is not about numbers but it is about your goal, potential value and why it is the need of the hour. Use this section to set the tone for your overall pitch document and all the sections of the investor pitch deck should be aligned with this – That’s the key!
Business problem is the gap or the bottlenecks prevailing in the existing market which when solved can open up a huge opportunity. Just think about any successful start-ups like Flipkart, OLA, Big Basket, Road Runner, Delhivery, all have a core business vision which solves a prevailing business problem or a gap. There are few business ideas which may not fix an existing issue but will open up a new market itself thereby giving a good value proposition to the customers. E-Commerce is a good example for that.
Supply | Demand | Opportunity
As a meaningful extension to the business problem, at this section get to the details on supply and demand pockets and the opportunity which is there in executing this business idea. Quantify the opportunity from the quantum of issues or errors or gaps in the existing scenario.
In this crucial section, explain how you are planning to solve the prevailing business problem. In your funding phase you may have to reach out of multiple investors and probably a lot of middlemen too, there is no pressing need that you need to document all the detailed solution in your deck and I won’t advice that too. You can keep the solution skeleton at the pitch deck.
“Dig Deep. Don’t solely rely on Information on Internet”
Research till you validate your business idea. Do what it takes to. The worst thing to do is jump on a hurry to execute your idea. Take a step back, take a while and research on your business idea to establish the real potential and opportunity that is available. Even if you have to put in more time than you planned for, don’t hesitate to put that time here at this stage.
There is a lot of say that don’t spend more time onto see what your competitor does. But I suggest the other way round, understand who your competitors are, what they do, what’s their market share, what they have done till now… these information is going to so vital as we move forward.
What is the value proposition for the customers and what is your competitive edge? Document that in this section. Unless you have a competitive edge, it is very difficult to generate cash flow and scale up business on a competitive market.
SWOT is an option but it a good tool to test your business from the market standpoint in-terms of Strength, Weakness, Opportunities and Threat.
Execution plan includes your operations strategy and the series of activities and work flow to make your start-up dream, a reality. Spend time with analysis like Make or Buy, In-house Vs 3PL, Hire Vs Contract etc., these details will give the right impression to the investors to get a grip on how you will drive this start-up to success.
Set forth the channels by which you are going to reach your potential customers with a clear marketing budget. A key note here is to document the returns expected at each of those channels and ensure it is aligned with your targeted customers.
You can be a jack of all trade but project all your core team members; if you don’t have co-founders with a skill set much needed for your business success, then ensure you have advisors on your team.
Talk about the revenue generation plan, your monetization plan and timing. This section is going to be of great interest to the investors.
Run the Profit and Loss statement and the cash flow for the next 3-5 years. If you don’t have the financial expert, do reach to the right expert to get this done since there is going to be a lot of questions around here.
Usage of Funds
Be wise here. Investors giving their money will be interested in to see how well you have planned to use the funds, where and how. Document a clear phase wise funds disposition plan.
Plain and simple – Investors are investing the funds to get the returns out of it and exit. Clearly document the exit strategy for the investors.
“As a concluding note, a well-expressed investor pitch deck with the vocal pitch from the founders will bag the funding. A winning recipe for funding is “An UNIQUE business idea in the hands of a capable team who can execute it”.”