If you are an aspiring entrepreneur or a founder and looking to raise pre-seed capital, then you are definitely stepping into the most attractive period of your entrepreneurial journey. Commonly known as the first stage of venture funding, pre-seed funding builds a strong foundation to kick-start a startup business. While some startups may not require this funding at all, however, others may end up going through several rounds.
So, what are the key things entrepreneurs should keep in mind before going ahead with a pre-seed fund? Answers to the below pointers can help solve the funding puzzle:
Does your business model solve a customer problem?
In order to succeed in a stiff competitive environment – it’s imperative for startup leaders to not lose sight of the “bigger picture”. Yes, a business solution or idea that can solve problems of the customer and makes a positive impact on the lives of people – definitely receives more reception. Therefore, it’s imperative to underline the social, economic or market benefit your new venture shall bring to the table.
Is the unit economic exercise defined?
During the pitch phase to investors, it’s important to prove your business model to be viable; and this can be achieved by defining the unit economic metrics. Should your pitch succeed in underlining the strategies that will work in parallel to achieve unit economic profitability – be assured that you have won the initial battle of earning the trust and confidence of the investor.
Ability to build your dream team:
To attract the right kind of investors, startup leaders should ensure that the team hired is not a homogenous team but brings in diverse set of skills to the table. If truth be told, it’s not about just building a team that works for you – instead, it’s about bringing together likeminded people that can share your dream and are passionate about striving for the vision. In fact, you may have a strong business idea with financial backing too, but if your team is not rightly balanced, then you might be heading towards some tough times.
Aligning the business model to the market opportunity:
An investment pitch must clearly outline the market opportunity that is realistic to your business. Often, during pitch presentations – entrepreneurs share market size figures published by research groups – that usually address a comprehensive market. While this may be correct from an industry perspective – it might not talk about the immediate addressable market opportunity (demonstrating potential scale) within the timeframe in which you intend to raise capital.