If you are a business founder in New York and haven’t yet considered raising funding for your company, you need to start right now. Probably the most crucial thing founders in New York will have to take their business through, after setting it up, is securing enough investment to propel it forwards into and perhaps beyond their target market. For New York startups, this involves starting by a seed round of funding (bigger companies can jump to Series A) by presenting their business to Venture Capitalists or Angel Investors. These parties will then decide whether or not to invest thousands of dollars into your business. And in the current age, where entrepreneurship is encouraged and investors are eager to invest, the competitiveness surrounding raising seed funds in New York is the most inflated it has ever been.
So, how does a new business in New York go about preparing once they decide to raise a seed round of funding? The following pointers can be helpful aids for founders.
Build Your Network
Start building your network today. Your pitch day should not be the first time you have an interaction with your peers. Remember, these are extremely competitive territories you are setting foot in. Your peers will be as goal-oriented as you are and they will, without a doubt, have come prepared. It would be naive and completely futile to go into pitching without receiving hands-on, expert guidance beforehand.
It is crucial to connect with investors who understand and have worked with other startups in your respective field. They will not only have a significantly better grasp on your business ideas but will also put you in touch with peers and other startups in your industry. They can also help point out specific areas for improvement that you or anyone else wouldn’t have thought of before.
NYC startups, particularly tech companies in New York, are strongly advised to attend workshops and conferences like Ascent or Brooklyn Startups. Such conferences provide you with a readymade platform to engage with investors, fellow business owners, and one on one meetings with experts in the industry. Other investor groups/events in NYC like # Startup, also provide you with invaluable knowledge and experiences prior to the big stage. Don’t fail to make use of these events to gather information about the investors and their investment process.
If you have faced rejection by a VC before, make it a point to get detailed feedback through such events and use it to fuel your progress.
If you are not already part of a network of fellow founders in NYC, it is advisable that you consider setting up your daily work in workspaces like AlleyNYC, Bat Haus, or Brooklyn Innovation Center. This will help you build connections with other entrepreneurs based in these spaces and give you a premade ground to learn and nurture from. Even the Brooklyn Public Library has an incubator to support early-stage businesses and entrepreneurs.
The importance of building these connections cannot be stressed enough. Going it alone will take you nowhere in the world of businessmen, VCs, and funding.
Evaluate your team and your business honestly. If you are at a nascent stage and struggling to make things work, it is highly suggested you apply for reputable seed accelerators in New York.
These programs coach you through building the business, the team, the product, sales, connections with investors among imparting other invaluable guidance. These programs will end with a pitch/demo day.
Accelerators like Founders’ Institute make use of a very comprehensive and thorough curriculum to guide early-stage businesses through training and assignments over a 14-week period. If you are a founder of a young business in NYC, you will be better off than your peers if you apply to such Accelerators first. Let them guide you through the onerous journey of getting your business set up and ready for an investor pitch.
Other seed accelerators you are highly encouraged to check out our NYC Seed, Techstars, 500 Startups, and Antler. Your chances of securing a round of seed funding are drastically boosted if you have approached it through an accelerator.
Keep your presentation no longer than 20 minutes (unless otherwise specified) while maintaining comprehensiveness. Introduce your business, the problem it addresses its aims, and the team you work with. Highlight the competence and adeptness of your team. Then focus on getting the more vital information across, especially financial data and data on future growth projections and outlook.
Practice your pitch in front of someone who doesn’t know anything about your business or the industry. If they don’t completely understand your aim, the problem you’re addressing, how your company works, etc., you need to reformat your presentation to make it more enlightening. Also, complement your presentation by bringing your actual product and adding professional images or demo videos.
This is one of those times where everything IS about money. Investors will be interested in all the ways your company can reap profits, grow in the future, generate revenue growth, etc. Backup all your information, future plans, discussions of past activities with facts, financial figures, and charts. Include testimonials from your clients to boost your profile.
Apart from sharing your past and current data relating to growth, you need to make a very convincing case of why the VC’s money will be better with your startup than any other. And by “better” in VC terms, this usually means a projected growth of above 500%. Depending on your sector and competition, this figure might be bigger.
Be ready to prove that you are a high-velocity company that is capable of providing attractive returns to their investments. This will require a lot of research and hard work on your part. Some experts suggest you focus on building your business and its profile as opposed to just a product or service.
It is however also advised that founders don’t expend their own time in doing such detailed financial analysis since there are many other aspects of a startup that will require their perpetual attention. The smart and ideal route to understanding your financials is outsourcing it to an accounting consultancy firm aimed specifically at startups and new businesses.
Reputable firms like Madera.ai will dispense invaluable advice and analysis pertaining to your company’s financials since they are focused on easing this burden for busy founders. With the evaluations, suggestions, and analysis you receive from these experts, you can answer the more in-depth questions from the VCs.
Use the information to create revenue projections for the next 2 years at least. Back it up by sharing solid, well-crafted plans pertaining to your current and future strategies, marketing efforts, growth aims and fund usage. Your business model also comes into this; VCs and investors are keeping an eye out for scalable ones.
Having said this, investors and VC are very adept at how financials work. They will see through any attempts at masking or distorting such information. The best approach would simply be to confidently address your weaknesses; perhaps it is your management or problems in price estimates. Address these before the investors start pointing them out.
Market vs. Trends
VCs and investors will be gauging some of your startup’s future potential by studying the market you are targeting. You, therefore, need to conduct adequate research into proving that not only a sizeable market for your product or service exists but that you’re taking effective steps to build your presence there.
Keep up to date with the trends that shape these markets. VCs also want to see how productively you are capitalizing on these relevant trends. An obvious example is AI, a rapidly growing concept in every other industry.
Be Prepared About Due Diligence Questions
Your presentation will likely culminate in having to answer questions pertaining to due diligence. Make sure you are well versed about your business’ past and future financial plans, legal issues, customer acquisition strategies, team competency, future growth projections, and other aspects that are slightly trickier to answer.
Overall, you need to be very aware of every aspect of your startup’s past, present, and future. Be ready to answer any difficult questions, with confidence. Financial data relating to your company’s past and future should be presented in the most comprehensive manner possible. Building a network of other startups and investors alike will open avenues of guidance that need to be leveraged in preparing an exceptional pitch to the VCs when you wish to raise a seed round of funding.