How to obtain funding for a start-up project? Which are the mistakes to stay clear of?
Ten tips to start your idea.
Ten steps to follow and a further ten to avoid according to Luigi Capello, an experienced host of the Luiss Enlabs start-up Factory
- Prepare your pitch properly. It should be clear and convey a captivating story.
- Focus on finding the solution to the problem.
- Emphasise the strength of the team. What are your strong points? Value the competences and the team members
- Make us dream and study the market. What is already available? How big is it? How much space is there for further expansion?
- Business Model, i.e. your development model. How do you intend to organise yourselves and what’s your marketing strategy? Try to ensure accurate Earned Value Management.
- Present a clear and viable financial plan for set objectives, be prudent, especially in the first monthly budgets.
- Exit Strategy. Define possible exit strategies and show them to the investor.
- Attempt to build trust by means of coherent behaviour.
- Study the investor’s market carefully. Network with those investors you believe are most suitable.
- Don’t contact every investor that comes to mind. Collect information on the investor you are dealing with and ask for an amount that is compatible with the amounts he usually manages and with his strategies.
The ten mistakes to avoid. Because investors are not “Fools”!
- The presentation contains mistakes and is inaccurate or the project is not described clearly. (Prepare before pitching !).
- The ideas behind the plan are not sufficiently supported or haven’t been tested. (You haven’t even done your homework!).
- If explanations have been provided to you, you are not prepared and clear in delivering them
- The team doesn’t have the competences or worse still is working part time on the project. (Have you ever considered taking up horse riding?)
- The business model is not consistent. Assess before asking for money.
- The funds mentioned in the plan are different to those being requested. You have financing needs of €500 but are asking for €1 million?
- You ask a Venture Capitalist for € 100 or a Business Angel for € 5 million: you don’t even know who you’re talking with!
- You ask a Venture Capitalist who only invests in renewable energy to fund your digital start-up. Know who you are talking with!
- You are about to complete the contract and you decide to go on an exotic holiday. Stop fooling around, surely you have the money you need!
- As soon as the funds arrive you change office, replace computers with newer models basically you begin to spend and squander. Oh my God! Who have I just given my money to?