Funding 101: How to Monetize Your Startup
The ‘Startup Industry’ has witnessed the arrival of massive investment opportunities. Any business venture, irrespective of what industry it belongs to requires a substantial amount of investment to get off the ground. What’s important is to figure out the kind of funding opportunity that you need to opt for, and what kind of funding method would be best suited for your venture.
Bootstrapping is the way to go. Although significant funding via investors can help one in quickly scale their business operations, it should be known that it is the Entrepreneur and not the VCs who lead business. Bootstrapping allows entrepreneurs to raise funding for their business without the assistance of investors. It mainly involves investing capital from the entrepreneur’s own savings, at least during the initial stages.
All new businesses require some form of funding to maximize scalability. When you feel that your business has gained some momentum, determine its scalability. If you expect it to more than double in RoI, you should definitely consider raising funds for your business. Analyzing every single factor prior to raising funds is essential. Go for fundraising if you feel the product is a risky and time sensitive bet, and you may need capital to help upgrade it.
The first question that comes to mind when you think about getting funded is, what is the correct, or appropriate amount of funding for a startup? The answer to this would be divided into two parts — Before and After Product/Market Fit. If you are thinking of raising money before you reach Product/Market Fit, then you should ideally raise at least enough money to get to Product/Market Fit. For raising funds after you’ve reached Product/Market Fit, a startup should ideally raise enough money to fully exploit the opportunity that lies in front of it, and then still get to profitability while still fully exploiting that opportunity.
There can be consequences to not raising enough money. You could either raise money considering you are still working towards or have achieved Product/Market Fit, raising enough money in each round is enough to get towards the next step in your business plan. Not raising enough money can lead to unanticipated setbacks within your business, along the lines of having quality issues, postponement of deadlines, and sometimes even losing key employees. There might not even be funding windows open for you as and when you wish. Funding is like a sales process, which involves a lot of networking, cold emails, and cold calling to potential investors, and you get to hear ‘no’ a lot, therefore finding the right people, and the right way to get through to them is key for your business.