Investing in Startups
Much like the recent startup t-shirt craze, investing in startups is very much the trend these days. With promising, new and innovative products and services that do well on the market, entrepreneurs can raise the number of their investors within a matter of days.
Investing in a startup is beneficial for both the entrepreneur and the inventor. Investing in growth-focused startups can help raise capital that in turn will empower both the startup and investor to grow and generate returns.
How to invest in a startup?
People invest in startups when they believe in its future success and expect the best return on their investment rate (ROI), given to them for the appreciation on the value of the company.
To invest in a startup it is necessary to know all the details about its goals, its products and services, owner, marketing strategy, financial indicators, especially ROI rate. If you are an investor, there are several ways to put your money into a startup, for instance, find an online venture investing platform (Kickstarter, for instance), build connections with entrepreneurs and attend pitch events.
How to value a startup?
The owners of a startup could have the best intentions, the best goals, the best ideas, the best value expectations and the best persuasiveness, but all this has to be backed up by real time action and execution of this business plan. This document should include strategies, projections and financial indicators that give clarity in the manner that a company will accomplish results; the real value of a company is shown into its business plan.
How to raise capital for a startup company?
If you are an entrepreneur and you need funds for your startup, you can list your startup on online crowdfunding sites, such as Seedrs Indiegogo, where small startups can easily find angel investors who are interested in their business idea (if you are in the U.S. you can search in the Small Business Administration web page). You can also find an accelerator that can provide resources for your startup. However, if any of that does not work, you can still take a loan from a bank.
Writing a business plan for a startup company
A business plan outlines the way a company will grow revenues. It needs to be clear, concrete, realistic and flexible. Following must be present in a startup’s business plan:
- Executive summary: an extract of the company profile and its goals.
- Company description: a description of what it does and what are it competitive advantages.
- Marketing strategies: a complete market analysis that shows the situation of the industry, the market and the competitors.
- Organization and Management: description of the structure of the company.
- Service or Product line: products and/or services portfolio of the company.
- Marketing and Sales: covers the details of sales strategy of the company.
- Funding Request: structure and application of fund needed to run the startup.
- Financial Projections: is the main backup of the funding request.
Regardless of whether you are an entrepreneur or an investor, you can make it big if you have an innovative and sustainable business idea and have the will to execute your business plan.