Seed funding guide
Any company needs a team, equipment, an office or production facility. Sometimes self-financing is not enough for each of these points, and then you need to find external financing. The first funding that a company manages to attract is usually called seed capital.
Seed money, seed funding, seed stage investments Seed funding is the first official equity funding stage.
In this article we will try to summarize what the business founders need to know about raising start-up capital for successful implementation and development of the company.
Investments allow companies and startups not only to exist and grow, but also are a significant advantage, because it is possible to scale a team, to establish marketing and sales. Despite the fact that there are many investors who are looking for where to invest money, the search for investment is a difficult, time-consuming and long process, which, however, many business founders have to go through.
Amount of investments
First, you need to understand how much you need. One way to determine the ideal amount is to decide how many months of work you need financing. The simplest formula is that you need to pay 12 months of work for 3 engineers, then 12*3* average salary of an engineer.
Investors rarely sign a contract on the first day of the meeting, so remember that your goal is to get the next meeting. When preparing for a meeting, study the investor, find out what he likes to invest in. Make your presentation as simple as possible.
Your resume should consist of one page (maximum of two). Include your vision, product, team, market size and minimum financial indicators (income, if any, and previous and current fundraising).
Make sure that your presentation is complete. Graphs and charts are more representative than words.
A pitch book (or pitch deck), also called a Confidential Information Memorandum, is a marketing presentation (information layout) used by investment banks, entrepreneurs, corporate finance firms, business brokers and other M&A intermediaries advising on the sale or disposal of the shares or assets of a business. wikipedia
You can use this template for your presentation.
- Your company / logo;
- Problem - what consumer problem do you solve?
- Target audience - who is he/she, your client?
- The solution - what have you created and why is it the right time?
- Competition - do you have any fresh ideas that others do not?
- Business model - how do you make a profit? Facts and plans.
- Team - who you are, where you come from and why you have everything you need to succeed.
- Summary - 3-5 key findings (market, main product).
- Fundraising - what you have already raised and what you plan to raise now. There may also be financial forecasts.
Fundraising is a difficult task for every entrepreneur or a startup, but we hope this guide will help you raise seed capital.