As many entrepreneurs are following their startup passion, fund-raising becomes an important part of their activity. A global investor can help you realize your Unicorn dream. These are the key prerequisites which will help you get the attention of a Global Investor:
Keep the Product Ready
Investors are unlikely to fund only the idea. They are keener in exploring an investment avenue if you can showcase something tangible. If you have a product or an app, keep the demo version ready. We had launched our website www.joblagao.com even before reaching out to the investors for seed round.
Find out their investment palette
Explore the domain where your prospective investors have parked their money. They will be unlikely to put money in your venture if they have a competitor in their portfolio. Some investors focus on a specific domain as they have proven expertise in that domain to mentor and get you business. They would be cautious in choosing a portfolio. They will have confidence if they received good traction/return in other portfolios in India.
Find a mentor/advisor in India
A foreign investor might find it risky to invest in a startup in India. Having a local mentor and a strong advisory board in the same domain would definitely help. Try to find out the missing link that can help you get connected and gain confidence of the investors.
Build your core team
Most of the times I see that all the co-founders are from the technology background. It is important to have someone from the business side as well. Part-time co-founders are not taken seriously. If you are running a startup, this should be your full time job and all your energy should be channelized towards the success of your venture. So quit your job before you start approaching investors
Prove your Business Model
You must show some revenue using the business model on which you would focus. It could be a small amount on a small market segment. But this data will help you to build the financial projections. They would like to see the revenue model and how it will be scalable using technology/investment.
Do the necessary Paper work
Make sure that all the paperwork is done before you reach the investors. Find a qualified CA, Accountant and a legal person to guide you. These are the 3 most imperative activities to be done
- Company formation should be done. Make sure that you have formed the company and decide on the share holding pattern.
- Open a bank Account and find out the compliance requirement to receive funds from foreign investors
- Get PAN and TAN number.
You would need additional approval from the local authorities if your venture has logistics and/or warehousing requirements. Check with other legal compliance. The investors should not be taken by surprise at a later stage
Prepare for due diligence
There would be due diligence check on various fronts. If you have are building a software, they will be running various scripts to check compliance and software licensing requirement. Ask your team members to prepare resumes. Keep the balance sheet ready
Keep the Documents ready
The investor’s will be keen in exploring the documents
- Business Plan Document
- Sales Pitch/Investor’s Deck
- Financial Performance in the past few months and projection for the future
- Monthly Cash Burn and Funding Requirement
- Product Roadmap
Projected Overseas Growth
This would definitely be of their interest if you can show a valid business case in India and extend it in other countries. Note that you will have to account for the projected expense and ROI. They would not expect an immediate expansion in the overseas market but a concept which could be extended to the overseas market would help.
Extreme Networking to Find a Global Investor
Last but not the least you will need to put additional efforts in finding global investors. Look at people around you, your family or friend might make certain introductions. A foreign client could also recommend you to potential investors. Try to attend startup meets and exchange business cards. Who knows you might bump into a global investor at a local event!