The Ultimate Guide to Funding your Startup Business

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You have a great business idea. How should you approach investors to fund your business? Ashik Hasim, partner at Essentially Precise, shares his valuable insights on the intricacies of funding your startup business.

 If you don’t build your dream, someone will hire you to help build theirs. – Dhirubhai Ambani

Entrepreneurs look at the most successful businesses when they venture into the market – Facebook, WhatsApp, Uber to name just a few.  What they do not realize is that 90% of the startups fail! Well, that does not mean you should be disappointed, but here’s a learning lesson of the fact that these failures are mostly due to ill planning or poor management.  A well thought, properly planned execution along with tremendous patience is the key to any successful business.  If you believe in your concept, no matter how long it takes or how many times you fail, work dedicated towards it, then it is sure to be fruitful.


Of the 4 most common directions of a business startup, the best option would be to identify a demand or to find a solution to a common problem.  As Jack Ma, founder & CEO of Ali Baba rightly states – “Do not sit idle and complain about problems around you.  Make a difference by finding a solution to yourself which in turn will help the public.”

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Focus on building a ‘must have’, not a ‘nice to have’ product. 

A quick search will reveal a lot of articles related to ideas and options to start a new business.  In this article I want to share some thoughts on how to get investors for your business once you finalize on a business plan.  Be it a new concept, reinventing what is already done, or solving a problem, the main focus should be on your plan and the business should be an extension of your passion!

MORE: How to Make Billions from your Startup

Investors – how do they help?

Angel investors, Venture Capitalists (VC), Peer to Peer lender, Governments, Banks are, to name a few, various investor options available these days.  Investors can help you from setting up your business to growing it multi-fold.  They can be involved in the day to day running of your business or be a sleeping partner.  The main purpose of them coming on board is to help you achieve your goal in a short span of time, what otherwise would take years to achieve organically.


Are investors really required for a business? Yes, unless you have sufficient funds and resources to achieve your goals.  Considerations when approaching investors should be:

  • What is the fund that you require immediately and in long term?
  • How much control does the investor expect?
  • How much control are you willing to share?
  • What is the investor’s motivation?
  • How experienced is the investor?
  • Does your venture meet the investor’s investment requirements?

Out of the lot, below options are recommended when you are hunting for investors.  Make sure they have strong background and can support you throughout your growth path.

Venture Capitalists (VC) – These are investment companies who will require strong business plans and are looking at high ROI.  They will have their investment in various portfolios and will be the best option for long term.  Unless you have a strong business plan or a proven business history, it is hard to get a VC on board.  Some VC’s do not get involved in your day to day matters.  Others might dictate certain mandates in keeping the books in order.

Angel Investors – These are commonly businesses who have wealth and want to explore other areas.  They might provide loans, get involved on your advisory board, or take shares in your business.  They will be by your side as and when required, but the budgets will be limited and controlled.

Governments – Various governments support their nationals by providing financial support for new startups.  This is an attractive option to kick start your business if you are planning to start a business in your own country or your partner is a citizen of the country you are starting the business in.  Consider Government entities as Banks who lend loans, but here the interest is very minimal and you have more flexibility in returning the funds.

Family / Friends – You strongly believe in your business, but do not have a strong plan of action to approach investors, or if you are just out of your college and want to be an Entrepreneur, the ideal option is to approach your family members and friends.  Call them for a dinner or plan an event and explain your ideas and future plans.  Apart from impressing, make them feel that they are also part of your final goal.  Get funds from various individuals that will keep the business afloat at least for a year.  Make sure to be the captain of the ship!


Do not get disappointed if you do not succeed with the first pitch for investors or if your business did not function the way you planned.  Jack Ma, founder and CEO of Alibaba, failed 4 times in different plans before he could turn a $50,000 business into $260 Billion Empire in less than 20 years.   It is sheer determination and hard work that will pave the way for your success., once a Billion Dollar company and rated among the top 10 E-commerce site, had to downsize and go out of business.  Finally the company had to be sold for less than 10% of what it was worth.  The reason being mismanagement of the funds and poor marketing plans.  They had investors on board with sufficient funds, but these funds were used to give discounts to attract customers.  At the end of the day when the business does not show sign of making any profit, investors pull out and all of a sudden the top management loses focus.

 There are no secrets to SUCCESS.  It is the result of preparation, HARD WORK and LEARNING from failure. – Colin Powell

How do I succeed in getting the investors on Board?

For a startup, irrespective of what product or service you are planning to launch, the most important aspect is to believe in your idea and aim high! Ideal situation would be to test the waters before you go public.  To do this, release your product to a handful of people around you – friends, colleagues, family.  Based on their feedback revisit your ideas, fine tune and relaunch to a different set of audience.  Continue doing this exercise till you get a good feedback and all issues/bugs are fixed.

You are now ready with a solid product to go into the market.  Do not rush as you have only sampled your product to people who are your well-wishers and will focus only at the positives of your product/service.  When you go public to audiences who come from different walks of life, not everyone may understand what your product is about or find it of use.

The best marketing tactic would be word of mouth where you get customers who like your product/service who themselves spread the word to others.  Begin with a small area or demographics and try to reach them through the most economical marketing options – Email marketing, SMS marketing or Digital marketing.  Initial capital funds should be used for these methods of marketing.  Have your own social media presence, participate in forums and blogs and send regular newsletters to your customers – keeping them updated about your product.

Keeping a low profile and with minimal marketing activities, you will get a clear idea about the product and how customers are responding within a few months.  Generate reports and analyze to see how the business is responding in comparison to the initial business plan.  Do not look at profits first; your aim should be to see if these selected customers are interested and that you are on the right track.  Accordingly prepare more detailed and a long term business plan that will include all aspects of budgets – team, marketing, patents, etc.

Prepare your business plan assuming you will have only 30 minutes to present it to investors.  In earlier days investors were more interested in seeing the figures.  The trend has changed where they look at your current/expected market share and customer base as well. Few important points that need to be covered are:

  • The concept and how does it fit the market – if you are solving a problem, define what the problem is.
  • The target audience and markets. Do not limit yourself to an area or country!
  • Your competitors and how better off you are from them
  • Statistics on how the product performed since launch and returns made from it
  • Statistics on how customers reacted to similar solutions and potential reach in the future
  • Budgets – clearly separating running cost, licensing costs, marketing costs and overheads
  • Expectations – what the company plans to make in the next 5 years

Your chances are really high if you are presenting your plan with the support of a ready and proven product compared to pitching without any POC.  You will also be in a stronger position to demand.  Make a selection of average to high reputed investment companies and start with the average ones.  This will help you fine tune your plans and pitch to highly reputed ones.  Always remember… feedback from these presentations should not disappoint you, rather these are valid points that will help you in perfecting your plan and business!

 A dream that you dream alone is only a dream. A dream you dream together is reality. – John Lennon

For a running business, the process is the same except that you are only looking at investments to expand your business.  Make sure you have all the audit reports, your estimations for the next 5 years,   and the overheads.  An investor either looks at adding your revenue to their portfolio or to have ROI in less than 10 years.  Expectations of the budget is based on your revenue and profit.  Investments can be anywhere between 5 to 15 times your profits or up to 2 times your revenue.  This purely depends on how much of the share you are willing to let go.

Never oversell yourself or your business.  Be optimistic in the plan and the projections as you and the investors will have to work with confidence to achieve these targets.

For any advice or support on Digital Marketing or development of websites, applications (Mobile, Interactive media etc.) get in touch with Ashik:

Ashik Hasim is a Partner at Precise Communications/Essentially Precise

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