How To Improve A Start-Up's Chances Of Getting Finance

How To Improve A Start-Up's Chances Of Getting Finance

Financing is time-consuming and tough. However, preparing on these lines can increase the odds of getting an investor’s nod.
Know what you’re looking for:

Equity financing is an option, as is debt, convertibles, etc. Get familiar with all these different kinds of finance, then figure out which one best fits you.

Funding depends a lot on the stage of the company and its revenue/business model. By and large, equity financing is best for start-ups provided that the start-up doesn’t give out too much equity in initial rounds, explains Arpit Jain, co founder and CEO of Splashmath.

A good practice is to raise as much as you need.

“Don’t get tempted to raise more just because you’ve found an investor. Raising too much money in the first round at very high valuation can lead to down rounds at a later stage which is very unfavourable for start-ups,” adds Jain.

Do your home-work:

Obtain a checklist of things investors look for during due diligence, and keep everything ready, suggests Aditi Avasthi, CEO and founder of

Investors evaluate all sorts of numbers—expenses, marketing projections, sales, etc. They also ask for the team composition and division of work.

You will be engaged in a discussion about this information. So know your accounts like the back of your hand, says Shefali Walia, founder, WeTravelSolo. You should also be able to correlate your accounts with your marketing projections.

And do get savvy about the legal terms that are likely to be thrown around. Talk to experienced entrepreneurs—especially those that have got financed by firms at whose door you are knocking—for more tips on how to prepare.

Be honest:

Best put all your cards on the table—honestly. 
“Project realistically, and make that forecast a part of the agreement,” says Walia. “If the forecast depends on several factors, state them. If the forecast comes with consequences, state them too,” she adds.

As well after the deal is struck, investors will spell out key metrics they expect you to achieve. Keep investors in the loop at the macro level as you work towards achieving those.

Be patient, and firm:

When talks don’t go your way, which happens pretty often, Avasthi would have you focus on having the right conversations with your investors to resolve bottlenecks.

Know that no matter what you say or do, the agreement will include some clauses that sound very harsh. Consider that the nature of the beast, she says.

But all along, be clear about your go-no go areas so you know what to fight for and even when to walk away, if it comes to that.

If not finance, find a mentor:

“Don’t pass over opportunities to building relationships with experienced people,” insists Jain. If not money, you may well find a person you see eye to eye with, willing to help you refine your vision for your next attempt.

Work on improving your pitch:

Getting rejected is a part and parcel of scouting around for finance.

“A good practice is to read VC rejections very carefully, and incorporate the learning in your next pitch,” says Jain.

Develop the right mindset:

Seasoned investors generally come on board with a great vision to scale your product. Look upon them as friends with the same objective as you. It will help you enter negotiations with an open mind and be more accepting of their suggestions, especially if their thinking is significantly at odds with yours, suggests Walia.

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