Life in the startup world is fast-paced, there’s no doubt about that. New tech entrepreneurs are eager to grow their business and start looking for investors. But before you hit the ground running, every early stage startup needs a checklist for raising VC money. For new entrepreneurs in the tech industry, there are many things to consider before seed money even enters the equation. Making sure you’ve invested in your own business and proving its worth are just the tip of the iceberg for new startups looking to take the next step.
Here is a quick rundown of five things your early stage startup should have on its checklist before raising VC money:
Accurately define your problem statement
Your problem statement is the core of your startup. If you can’t define what problem you’re solving, proving your worth to investors is going to be impossible. People need to know what’s wrong, and why your solution is the best way to address it. A “solution” without a problem might just be a pipe dream.
Survey the market
Every early stage startup needs to know their TAM (Total Addressable Market). Investors want a billion-dollar marketplace, but taking stock of your TAM can do more than prove your worth. TAM values offer analyses of your market composition, and can also help you prove to investors that you’re ready to market your product.
Put in your own money
Investors like to see that you believe in your own idea, but don’t bankrupt yourself. Reza Piri, founder and CEO of GennovaCap, suggests that a personal investment of $20,000 to $30,000 is a good place to start.
Friends and family first
Before you go pitching your ideas to the big leagues, try selling your startup to your friends and family. Practicing your pitch is essential to getting it just right. Work out the kinks on your home turf before seeking out VC money.
Prove your market hypothesis
The best way to win over investors is to prove your worth. Find cheap marketing channels and start getting customers. If there’s one thing investors want to see, it’s that your product is desirable.
For every early stage startup, a checklist for raising VC money is essential. Keep these five tips in mind and you’ll be on the right track.