By Fernando Berrocal

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As an aspiring or early-stage startup business owner, you most likely already know that raising funding (for any kind of business) is not a simple task to accomplish for any owner or employee. This is especially true for inexperienced funding managers or entrepreneurs in the early stages of their businesses. That’s why they are always looking for different ways to seek investment from any business source.

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There are two sides to every story, and each one has different things to win and lose. Millions of dollars are sitting on one side of the table, ready to be invested in new businesses. On the other hand, an unproven idea that may or may not turn out to be a profitable business for its stakeholders and it's in the head(s) of the startup entrepreneurs. Your major task will be to persuade those who have millions of dollars available for investment that your startup business idea is worthwhile and can be beneficial for everyone involved. To put it in simple terms, this circumstance can be quite terrifying but it's a business situation that you will face at some point, and you must prepare for it.

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The COVID-19 pandemic has impacted the business world making fundraising even more difficult than ever before. Even worse, due to the fierce rivalry in larger organizations during the past decade, the percentage of capital going to early-stage startups with fundraising sizes of $5 million and lower has been declining yearly. That’s why you must adopt a long-term perspective of the process if you want to successfully raise money in this present context.

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First, you need to realize that fundraising is not a one-time effort for an event. It doesn't begin the day you create your pitch deck and ends after the funds are securely deposited into your business bank account. If you continue to play the business game, it begins long before you need a financial investment. Therefore, even when you aren't actively "fundraising," what you do every day affects your capacity to raise money. In consideration of this, we will discuss some crucial suggestions for entrepreneurs looking for investment from the perspective of venture capitalists (VCs)  in the current year in this blog article.

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• Be Ready To Meet With Investors at Any Time: Continue to grow your business network and keep track of everybody who might be involved in the next round of funding. Attend a variety of events and share your business experience and concept. Be open to unforeseen circumstances that could lead to new friendships, although it may sound strange to meet key people at these types of events. Those places can be a trade exhibition, a meetup with the local community, etc. It has occurred that some startup founders have encountered a key investor. Investors are constantly seeking opportunities in your sector or the stage that your business is at. Be ready to share your organization's story, and don't pass up opportunities to network everywhere you can.

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• Everyone Has a Business Resume: Your educational background (bachelor's and beyond), leadership roles, community assistance, and other indirect business experiences will also be taken into consideration by possible investors in addition to your direct business experiences (such as the number of firms created). You must know that now everything is known about a person, and you cannot escape from your past. In simple words, your track record includes everything you have done. Although that may sound unsettling, what it means is that you can take action to use your past experiences to try something new and beneficial.

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For example, people may invest in your first business even if you have no prior experience as a Chief Executive Officer (CEO) of any business based only on your reputation as a loyal friend. But with that capital, you launch a business and begin establishing your credentials as a CEO. Whatever you're doing right now, put your all into it because whether you like it or not, it will appear on your business resume and can help or damage your business dreams.

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• Ask Your Business Contacts for Warm Introductions: The parties involved in investing must have a great deal of trust in one another. Any kind of investor would be foolish to provide millions of dollars to someone they hardly know since the stakes are simply too high. Warm introductions are used at that important moment for your startup investment. They primarily focus on building trust amongst the individuals who will make up a relationship. Consider them as an investor's form of validation. Even if they don't know you at all, if a trustworthy third party stands up for you, it builds a bridge that otherwise wouldn't have been possible. A straightforward recommendation is an incredibly powerful scene in any professional situation.

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Without friendly introductions, raising money is more challenging but not impossible. Remember that even with warm introductions, many investors say "no". It's challenging for investors to choose a stranger given the vast availability and high level of risk.

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• Create a Steady Motion:  Choosing to invest in a business is typically not a quick decision. It takes a lot of time and involves extensive research, reference checks, and other administrative tasks. If you're the one asking for money, that can be unnerving, but it also gives chances to demonstrate to investors that you're moving forward and gaining momentum. By removing a technological risk or introducing a new product, you might demonstrate progress, but the key is to carry out your business plan. It's crucial to remove obstacles for your investors. Their sizable checks will only hasten the expansion of your firm if you can demonstrate to them that you can drive the business forward and maintain momentum without their funding. That will make their investment selection much simpler.

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In conclusion, there are different approaches when it comes to how to obtain an investment from VCs. The most important ones are to be ready to encounter an investor in any situation possible, build up your business resume, ask your contacts for business recommendations, and create a steady motion. With all of that, you will be closer to closing a deal to have your business financed by one VC.

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Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.