If you show me an entrepreneur, I’ll show you someone looking for a way to make money. While it may be challenging to create a better mousetrap, finding someone to invest in it appears to be even more difficult. Entrepreneurs are always on the lookout for the right connections, whether a networking contact or a third party with credibility who can connect them with the right person who has money fire a pit in their wallet. However, this is less about who you know and more about how you’ve at the end of each day.
Of course, everyone is aware of and envious of the tales of business owners who completed a seed money round in ten days and were trying to trade on the NYSE five years later.
Yes, now and then, a Cinderella story emerges, but the harsh reality is that there is no natural way to bypass the funding process. Being an Investor, you know that approximately 20% of new ventures fail in their first year, 30% fall in their second year, and 50% fail by the fifth year. As a result, investors are naturally cautious and sceptical.
90% of startups fail to achieve self-sustainability before they reach a certain level of success. Why? According to a recent study of 101 failed startups, 29 percent of them simply ran out of money.
The simple fact is that investors reject a higher percentage of proposals that arrive on their desks. They are investing more money but in fewer transactions.
Being an Investor, you want to be sure that you’ll get a good return on your investment. Vehicle financing is a fantastic opportunity these days.
Invest in startup asset financing even though entrepreneurs are doing something different and novel, which means less competition and higher margins. As a result, they could even offer an IRR of 21-22 per cent.
But whether you’re looking for an investment place or trying to apply to an accelerator program, there are a few things that you need to look for.
Startups might be prepared to believe that their first priority should be to secure as much financing as possible. To raise quite so much money as possible right away. This is a very common blunder.
A typical startup will go through several funding rounds, with each round consisting of just enough money to get you to the point where you can shift gears. Few startups get it right the first time. Many organizations are underfunded. Some people have too much money, it’s like trying to drive in third gear.
To put it another way, their goal isn’t to raise as much money as possible at each stage. They want financing that is proportional to the rate of burn.
Here’s the thing: financial support isn’t a badge of honor. Rather, funding allows startups to buy time to survive. When they have the correct amount of money, they can shift into the next “equipment,” as Graham put it. Main goal is to strike a balance between not taking on too much debt and offering too much fairness.
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Let’s take a look at the various kinds of investment sources and the services they typically offer. The funding vehicle users seek will be determined by the options associated with each source.
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To point out the obvious, money invested would be when you put your own money and resources into your startup. This demonstrates to shareholders that you’re serious about growing your business and have invested your own money.
Both the corporation appraisal and the average financing amount will be determined by the startup’s advancement and the founders’ resources.
Ex-founders (persons, not VC firms) who use cash from previous exits to invest in other startups are known as angel investors. Typically, they invest in startup companies that are in their most risky stages of development.
Angel investors typically value companies at $3 million, with an ordinary funding amount of around $150,000.
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Venture capital firms fund companies that have proved major product fit and are making great progress.
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When a company reaches Series B and C, the chances of being acquired are high.
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Accelerators provide support, schooling, partnering, coaching and mentoring, and financing to early-stage businesses. Accelerators generally take a portion of the equity in exchange for funding and mentoring. The amount consumed is determined by the accelerator.
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Crowdfunding is when a business seeks the support of a large number of people rather than a venture capital firm, angel investor, or activator. Backers are usually compensated in some way for their supporting the company.
Equity crowdfunding is similar to the normal crowdfunding, except that the reward is a small percentage of the company’s stock. The total amount raised through shares crowdfunding in 2018 was $2.5 billion.
Depending on the organization as well as the project it is attempting to launch, the prior to investing amount will vary.
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Many startups make the error of having to put the cart well before the horse when it comes to finances. They rush to find an investor, once it should be done later in the startup process, after you’ve formed product-market fit and secured early adopters.
Products with some traction in a huge market are eligible for funding. Exceeds the specified can be a recipe for disaster for the 99 percent of businesses that don’t fit this profile. If you’re working on an invention, keep in mind that necessity, not money, is the mother of invention. After you’ve substantiated the MVP and added a pool of paying users, start looking for investors.
Investors would like to see a solid, well-thought-out, persuading, and comprehensive business plan first and foremost. They would like to know that you’re not winging it, that you’re not overoptimistic, and that you’re at least mainly realistic about your company’s future. They want to understand that you have a vision for your company as well as a strategy for achieving your objectives.
They’ll want to see revenue models, comprehensive marketing plans, and information about your target market in your business strategy.
Investors are putting more money into fewer deals, so keep that in mind. You’ll need a rock-solid strategic plan if you want a piece of that money.
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Investors would like to know if your product is well-suited to the market. Your product is being purchased. Your service is attracting a growing number of users every day. To serve your growing customer base, you’re required to employ sales and customer service personnel. Reporters are calling because they’re interested in learning more about your hot new products and services.
In a nutshell, product-market fit occurs when customers recognise the value of your product based on their understanding and use of it. That is what investors look for. They want that a large number of people recognise the value of your product and are eager to use it.
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The majority of investors are planning to hire opportunities that have the potential to grow. As a result, if your industry is only 25 miles from your headquarters, your expansion options are limited. Depending on the nature of your product, you’ll need a market with substantial reach, at least regionally. If you’re selling surfboards, you obviously only have a call in this region along the coasts, but given the size of the overall surfboard market, that might be enough.
Not every item, like the iPhone, will have a global market. To attract investors, you’ll need a large enough industry where scale economies can be integrated into your processes to boost margins and profits.
Investors have a variety of fund sizes, so you’ll need to find one that matches your ambitions. A large VC firm which needs to make a lot of money won’t put $50,000 into your company. On the other hand, you don’t want to throw the ball at an investor who would only put down $35,000 if you’re hoping to broaden on a large scale.
You must target a large market if you want to attract the biggest investors. The majority of investors will pass up an asset that will only yield a million dollars. Even the most careful investor will stop and reflect on your corporation if you are targeting a billion-dollar market.
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Because of a lack of product-market fit, 42% of startups fail. If you really want to attract investors, you must have a proven MVP that meets the needs of the target market. Your product might solve your biggest problem, but if it doesn’t cut the market’s itch, you’re out of luck.
Are using this simple framework to map out that both your clients and the pain points you’ll be solving once generating your MVP:
People nowadays are so focused on pitching to investors that they forget to interact with customers first. I’ve had people pitch me, and then when I ask what consumers say, they say they have no idea. So, why are you currently speaking with investors?”
Already when you pitch investors, make sure you have a minimum viable product (MVP) that customers want.
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For investors, this will be a key problem. What distinguishes your product or service from others? There must be something distinctive about your product. That could be it if you have a never-before-seen product and are the first to market. The majority of startups, on the other hand, are entering pre-existing markets. So, what distinguishes you? Consider MVMT timepieces. This company recognised that there are a plethora of high-quality timepieces available.
Their strategy was to offer high-quality wrist watches at reasonable prices. Their competitive advantage is a low price for a similar level of quality. Rolex, on the other hand, stands itself as the industry leader in terms of quality and design, justifying their high price. Their unique selling proposition is that they believe they have had the best product on the market.
Investors need to see that you have a distinct advantage over your competitors. They could indeed easily find your contest if they’re not already aware of it. They would like to see evidence that your competitors can’t easily outdo (or replicate) you before they buy shares in you.
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Before they give you their hard-earned money, investors want a strong leadership team set up. You can usually find a passionate, enthused technical co-founder who can help add power to your team, even if you aren’t technical. While the exact figures are debatable, most startups give co-founders between 10 and 35 percent of the company’s equity.
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Investors are looking for more than just a good idea. They’re looking for more than a strong pitch deck or business plan. They need to see that your concept has some traction behind this one.
A new venture must generally exhibit it has a marketable product or service by starting operations and demonstrating significant ability to sell this same product or service. The venture has to have a “proof of concept” to show shareholders in some way.
They evaluated the market by categorizing YouTube ad links into different categories, then paying people just a few cents to observe ads in categories that were relevant to them. People were prepared to watch ads if they were paid; thus, they assumed that people would watch ads if they were given real value. The company was able to increase seed capital and attract the attention of a venture capital firm, which was interested in funding the platform. Unfortunately, while folks would witness ads for cash, they did not always watch them again for value in kind. Nonetheless, the platform was taken into account for funding because it had gained some traction or had demonstrated proof of concept. The company was able to increase seed capital and attract the attention of a venture capital firm, which was interested in funding the platform.
Every year, they hear thousands of pitches, but only a small percentage of them progress beyond the concept stage. Demonstrating that you have significant momentum is one of the most efficient ways to secure funding.
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Things like bootstrapping a product, signing early clients, and hiring strategic talent are all examples of this. All of this indicates that you are both enthusiastic and resourceful. That you’re serious about bringing your concept to life. The further you can go without the help of investors, the much more likely investors will believe in you.
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Investors expect a strong return on investment, so you’ll need a solid exit strategies in mind. Even if they’re willing to be flexible and make the long investment in your company, they need to understand that they’ll see a significant back at the end of the day.
Investors will most likely be interested in both your exit plan (acquisition, sale of shares to precepts, etc.) and your timeline. They will be reluctant to invest in you if you cannot provide both. Shareholders want to see the following types of projections:
This shopping list highlights the types of questions that will be asked about an exit strategy and provide some extra information:
What are the most popular startup automobiles right now? Which ones are trying to attract the most money? Here are 3 to think about.
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Cryptocurrency has enormous potential in a variety of fields, including finance, real estate, and world affairs. While the Cryptocurrency crash may have turned many consumers away from digital currencies, startups in this space continue to attract significant funding:
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Investors are taking notice as the cost of smart factories and robotics falls dramatically while labor costs rise dramatically. The average cost of a robot has dropped by more than half when compared to labor costs, making it a potentially lucrative investment for investors.
Investment in high tech hit a new high of $597 million in Q4 2017, as more mainline private equity shareholders saw the potential in applied robotics. The primary drivers of higher investment levels are short-term organization’s sales, unit economy, and result in massive.
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The Indian automotive sector benefits from a variety of factors, including low-cost skilled labor, strong R&D centers, and low-cost steel manufacturing. The industry also offers excellent investment opportunities as well as direct and indirect jobs to skilled and unskilled workers.
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Have you really sat after that to someone on a plane and realized that you have very little in common professionally or socially whenever the conversation begins, but you just seem to connect? That’s where the X-factor comes in. When you meet with investors, you may notice a connection that you can’t explain. Maybe it’s just a matter of personal chemistry. Perhaps it’s discovering a commonality, such as in the same fraternity or knowing the same folks. You can’t plan for the X-factor, as well as you can’t go out of your way to find it. However, if you discover it, it will be beneficial to you.
Being genuine in your demonstration is the ideal route to see if the X-factor exists. Don’t over-professionalize yourself. Be yourself. Be the entrepreneur with a great idea—one that is both socially and financially beneficial. Never to the investors, but with them. And pay attention to them. What they find important will be revealed by the comments they make and the remarks they make. Listening also will lead to the discovery of those things that indicate the presence or absence of the X-factor.
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Learn how to invest using these tried-and-true methods, and you’ll feel more secure about your financial prospects.
People who invest and stay invested are more likely to receive positive long-term returns, according to history. It’s tempting to make financial choices based on changes in your portfolio when markets start to fluctuate. People who make financial decisions based on emotion, on the other hand, are more likely to buy when the industry is significant and sell when it is low. These investors will have a more difficult time achieving their long-term financial objectives.
How can you stay away from these common investing blunders? Consider the following investment strategies, that can help you reduce the risks of investing while also allowing you to earn more consistent returns:
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The way you weigh up the investment opportunities in your investment to try to meet a specific goal is referred to as an appropriate investment portfolio. It is the act of investing in various of asset classes, including:
For example, if ones goal is to achieve growth and you’re prepared to take market risk in order to achieve it, you might decide to invest up to 80% of your invest in stocks and only 20% in bonds. Make sure you understand your investment timeframe and the potential risks and rewards of each asset class before deciding how to divide the types of assets in your portfolio.
The possible return and market volatility of different asset classes vary. Government T-bills, for example, unlike stocks and corporate bonds, guarantee principal and interest, though money markets that invest in people do not. Past performance does not guarantee future results, just as it does with any other security. Furthermore, asset allocation doesn’t really guarantee success.
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Portfolio diversification and investment strategy go hand – in – hand. The task of choosing a variety of investment opportunities inside every asset class to help minimize investment risk is known as portfolio diversification. Diversifying across asset classes can also help your portfolio weather major market swings.
How diversifying in your portfolio can help you reduce potential losses
If you invest solely in the shares of one corporation, you’ll be taking on more risk because you’ll be relying on that company’s performance to grow your money.
This is referred to as “single-security risk,” or the risk that the value of your investment will fluctuate dramatically depending on the price of a single holding.
Instead, if you purchase shares in 15 or 20 companies across a wide range of industries, you can reduce the risk of a significant loss. If one investment’s return is declining, the other’s return may be increasing, helping to offset the underperformer.
Remember that this does not eliminate risk, and that there is no guarantee that your investment will not lose money.
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Dollar-cost taking an average is a diligent investing strategy that can help one’s asset allocation smooth out the impact of market fluctuations.
This strategy involves investing a set amount of money in stocks, bonds, and/or investment products on a routine basis. As a result, once prices are so low, you buy more shares, and when prices are high, you buy fewer shares. Your average cost per share will typically be lower than the average price of those shareholdings over time.
This strategy can also prevent you from making sentimental investment choices because it is structured (thus minimizing investment risk).
Seasoned investors understand that losing money is much easier than gaining it. Every investing strategy comes with its own set of risks, and managing those risks is the key to getting the most out of your money. Don’t aim for greater rewards without first assessing the risks.
By doing any type of investment, be it an FD, Mutual Funds, or Stock market, you are betting on some business outperforming the market by growing faster. Exa Mobility is one of such businesses for which you have a chance of betting directly. In other cases, there are a lot of middlemen, agencies, brokers involved in the loop, which will take some portion of your investment. With Exa Mobility’s Asset Financing Program, You are directly participating in our business by financing Electric Scooters for us, so that we can make a good amount of money by utilizing these vehicles for renting out to Logistics Companies, Delivery Executives for which there is huge demand from the market, especially due to Covid-19. Soon, Exa Mobility will start its own logistics service, so that we can do maximum utilization of our fleet.
In the end, what investors seek in a startup isn’t all that complicated. They want to make sure you’ve got everything in order.
Do you have a well-thought-out business plan and a product that is well-suited to the market? Do you have an MVP in mind and a strategy for standing out from the crowd? Do you have a clear and scalable customer acquisition strategy? Do you have a clear exit strategy in place to ensure investors get a good return on their money?
More money is being put into fewer deals by investors. If you want a piece of those funds, you’ll need to establish credibility. If you can, you’ll have a much better chance of getting funding.
