The Art of Getting Funded

 Need tips to acquire funds for your start-up? Read what author TGC Prasad has to say after two decades of corporate experience. 
Of-late, when I read The Economic Times or come to it, any newspaper – the Technology and start-up page really interests me. Enthusiastic faces, soaring valuations and much money poured into early stage start-ups. It looks euphoric. It looks like the world out there is getting funded. But really speaking, there are many other start-ups out there, who do not get funded. So, what is the difference between a company being funded and many others still scouting around and in all possibility may never get funded. After having met many entrepreneurs and venture capitalists in the last few years, I have kind of learnt a few things on funding.
Idea: The idea needs to be really compelling. In the sense that, it has to solve a problem or seek an opportunity which may not have been explored or in the initial stages of take-off. The solution has to be simple, scalable and importantly should be able to solve a large part of the problem or tap a significant part of the opportunity at hand.
Also, the idea should not be in a crowded market where many existing players are already chipping at its seams, unless it is so compelling that your idea is going to disrupt all the existing players. Examples: Convenience of booking air-tickets online. Convenience of accessing stored files anywhere on the net and access it.
Scalability: A typical venture capitalist draws funds and deploys them on various start-up ventures she thinks is going to yield substantive returns. The typical exit time-frame VCs look for is anywhere between 5-7 years and expect significant returns on their investment, almost 10-15 times, may be more. So, VCs always look for dis-proportionate scale in revenues, profitability and to an extent market-share. Which means, the size of the market has to run into billions of dollars. For example – Gaming is a multi-billion dollar market. Many companies got funded. Similarly e-com is a significant market; companies were funded by the dozens.
Team: When you go with an idea and may be some amount of initial work addressing the concept, really there is nothing much to show other than what you are and perhaps where you can go with the idea. So, the pedigree of the team and how they work together makes a lot of difference. Many people come together to make it happen, but don’t get funded because their past doesn’t really corroborate with what they are embarking on. VCs look for disposition, chemistry, relevancy and importantly learn-ability and scalability of team.
Getting off the ground: This is another important thing. Only idea will go only so-far. Scalability is a great dimension to have. Team can take you to the next level. But then the proof of the pudding lies in what you have accomplished so far. Do you have a working concept, what are customers saying about it? Do you have decent market traction? What are some of the issues that you are facing? Are you full-time involved in the venture? Are you passionate is determined by the commitment that you have displayed. Clearly, if you go only with an idea, unless you are a rock-start, a VC could hesitate to fund. Everybody looks for some traction. So, get out there and start-off first and do some work.
Pitch: You may not believe this, but VCs also get influenced by how you pitch it to them? Confidence, communication, conviction and your convincing prowess adds a lot to raising funds. Remember VCs are people like you and I and have subjective bias well. They will look for those rough corners and edges which aren’t polished. So, make sure you do a great job of creating a world-class presentation which details a high level summary and as well provides those relevant details the VCs are looking for.
Besides all the above, segment your VCs. Who will fund and who would be skirting on the borders. Be careful who you pitch it to. Some VCs could also be incubating a company in stealth mode, in the same space you are in. Just like a VC assesses you and your idea, you should also assess the VC and figure out where he/she is parked. Importantly ask the question, ‘is this somebody I want to take money from? Would I be able to work with this person in the long-term’?
Hope these learnings help you as you scale your venture. Good luck – go create!
TGC Prasad has been a corporate honcho for over two decades and has written three books. 
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