Avoid Bankruptcy: 5 Tips To Avoid Rejection While Raising Startup Funds

When Jennifer Lawrence made an appearance at the 85th Academy Awards in the year 2013. It made people raise their eyebrows and stay flabbergasted in a state of awe. Not because Jennifer Lawrence steals the show with her looks. But because the dress she was wearing was worth $4 million. The decision of what to wear to the Awards is a tough nut to crack, especially when your reputation is on the line. The same theory applies to founders who are willing to raise startup funds for their company.

Break out sweat and reveal your apprehension, and you will fail to get the startup funds required to get the ball rolling.

Some people might not consider it fair but when it comes to raising startup funds. A CEO is a person who is accountable for the results. Therefore, it is important to plan out your startup fund before you pitch it to the investors.

I served as a board member for a professional digital marketing company. And what I’ve learned is that for a machine to operate smoothly, all the parts need to be in the right place.

This means that there is not a single part that is solely responsible for the operation of the machine. The company is the machine and the various departments in an organization constitute the parts of the machine, starting from PR to customer support, and sales rep to top-level executives. If all the departments are properly synced together, the company will surely raise the capital that it needs.

So before you stop reading, let me cut the boring analogies and get back to the real stuff. How to protect your business from falling prey to bankruptcy and never get rejected while asking for startup funds!

1. Give Quality Time to Your Relationships

Being environmentally friendly does not have to cost you an arm and a leg, but it can reap many rewards. Building relationships before you take help from an investor is an ideal way to win venture capital without trying hard.

When you are up to your neck busy running a startup, it is often difficult to pour some energy into nurturing strong bonds with people. There is so much on your plate, be it managing your team, solving day-to-day issues, and working hard to keep the operations running smoothly, that you often neglect to take out time to talk to people.

Imagine this. When two companies are equally competent, what is the one factor that will lead to starting funds? Your relationship with the investor.

Yes, it is often difficult for you to chat idly with your investors over a cup of Joe, but it doesn’t take much time to send a handwritten birthday card to them.

Even if nothing else works, it is that bond that gets the job done.

2. Scrutinize the Habits and History of the Investor

I still remember my first investment. Before going over to the investor, I did some background checks and came to know that the investor’s son loves dogs. On my way over to the meeting, I picked up a puppy and gifted it to the investor, as a good gesture. There were 5 startups out there and who do you think got the investment?

Just like everyone else, investors see the world with a diverse set of eyes. Some like to support high-tech new ventures, while others are more predisposed to gambling on small startups and expecting huge returns.

In ‘The Psychology of Investing’. the author, John R. Nofsinger puts it beautifully. The point of investing in a startup has less to do with the technical aspect and more to do with the instincts and trust in the founder.

It is good to understand the thinking patterns of the investors and know their past before you pitch them your company.

3. People Prefer People with Similar Nature

It doesn’t take a rocket scientist to unearth information about anyone. Just Google and you’ll get all the references and personal information regarding that person.

Instead of being egoistic, try to mirror the behaviors and habits of the investors. This will give them a feeling that you’re from the same tribe.

Figure out your best strengths and communicate them to the investor.

Investors are always looking for startups that present their ideas in the most promising ways.

Once your company makes it to the shortlist, it is your job to sell yourself and your brand to the investor. The investor will categorize your idea into a handful of similar ideas. And then it is up to you to outdistance yourself from others.

4. Defy the Categorization

Everyone talks about what is unique in their brand, but people often fail to impress the investors when it comes to selling themselves. Instead, they start blurting and fail to make an impact on the investors.

At some level, this is purely an emotional decision. There’s no way to know for sure, so they’re relying in part on their instinct.

The only way you can win over the investors is by understanding and influencing their gut feelings.

5. Work on What You Can Control and Leave the Rest

There are countless things which can go wrong in the startup funds process and trust me, you’ll be hearing a lot of resounding “no’s” before you get a “yes”.

You need to understand that you cannot control the decisions of people. If a potential investor has a poor relationship with one of your team members, it will reflect badly on the investment decision and you cannot do anything about it. Another investor may have recently had a bad experience with a company like yours.

There’s nothing you can do about that.

But what you can control is to create a product which is performing well and do an excellent job in winning over the investors.

To Conclude it All

By implementing the above tips you’ll surely be able to close the deal. The next step after raising the money is to hire competent employees who truly support your idea. Now it’s time to grease those elbows and raise some money.