The Government’s sustained efforts to promote new age entrepreneurship among the youth have yielded results in the last few years, startup From just 452 in 2016 to 84,012 in 2022. However, new startup founders often wonder when they should approach investors – at the idea or vision stage, early-development stage, or maturity stage. News18.com Wants clarity on this from several experts:
Ayush Atul Mishra, CEO & Co-Founder, Tattvan E-Clinics, said, “It is always better to start pitching in the initial stages of the business as the investors gradually get to know you. A time frame for you to explain your idea to them Yes, you have to meet that timeline effectively. Many people prefer to pitch later when the business grows but that doesn’t mean it will turn into something significant.”
He said that the most important thing is the illustration of the business idea and this is something that can make or break the deal for the business.
During 2022, Indian startups are set to raise $25 billion in funding, a 40 percent drop from the previous year. According to Inc42’s latest ‘Annual Indian Startup Funding Report 2022’, seed-stage startups attracted investor attention in 2022, but growth and valuations of late-stage startups have seen improvement and are still undergoing a reset Huh.
Kishor Ganji, Founder, Astir Ventures, said, “For founders trying to raise first round capital, two routes are recommended – a) If they have relevant experience, either academic or institutional, they can b) If the founders do not have relevant experience to the industry they are trying to enter If doing this, it is advisable to seek funding only after beta testing a valid pilot or MVP.”
However, he added that there is no formula that fits all at the right time, but in general, startups can approach investors only when they have a clear plan and path to progress. Fundraising is an ongoing process; Startups of all stages raise different amounts of money.
“Whether it is pre-seed or growth capital, the funding cycle is much longer than it used to be. Founders should keep this in mind and be careful with their runways. Another good practice is contacting investors early but not pitching for funding immediately. That way, you let investors know that you’re building interest and value and give them an opportunity to see and track your progress; So that they can invest in the right round of funding. This approach can help save a lot of time for future funding rounds,” said Ganji.
Manu Awasthi, founder and CEO of Centricity WealthTech, said that founders cannot expect investors to fund a company with only a business plan and a vision. Your business must already be operational and must have demonstrated its ability to do business.
“Selecting the proper investor can make or break your firm, whether you are employing crowdsourcing or leaning towards the private investment sector. A good investor, Awasthi said, thinks about the long term before lending money to any business, especially a start-up.
He also said that there is no single best time to invest; Rather, it’s important to match a company’s stage of growth with the right investors.
pitch for funding
Shilpa Mahna Bhatnagar, Founder, Heiva said, “It is always better to prepare beforehand as it gives you an edge over others but there is no right time to speak. Some get investors interested in the very first presentation, while some don’t even after a few rough rounds. If we are talking about investors then we should look at the numbers because ultimately that is what gets their attention.”
Along with this, it is important to have a plan so that you are well prepared to present your real ideas and are able to articulate them in the right way, he added. R&D plays an important role in this analysis. Once you are sure of the market potential and economic viability of the business, you should start your rounds.
Government Initiatives for Startup Funding
The government has also taken several measures to support startups including Startups India Action Plan, Fund of Funds for Startups Scheme and Credit Guarantee Scheme for Startups, among others.
Under the Startup India initiative, the government has implemented Fund of Funds for Startups (FFS) and Startup India Seed Fund Scheme (SISFS) to provide capital at different stages of the business cycle of startups.
The Fund of Funds for Startups scheme was approved and set up in June 2016 with a corpus of Rs 10,000 crore, with contributions to be made in the 14th and 15th Finance Commission cycles depending on the progress of implementation.
As on November 30, 2022, in the FFS, out of a corpus of Rs 10,000 crore, about Rs 7,527.95 crore has been sanctioned to Alternative Investment Funds (AIFs).
read all latest business news Here