Business setup- Check
For almost every entrepreneur this question comes to life at a time, is it the right time to generate funds? If it is, then how? However, there is no such defined set of metrics that can guide you to a million dollar funding, but in today’s article we try to help you as much as possible to reach the landmark.
As per our point of view, one of the most important principles about raising capital, is to get as far as you can without raising capital. Before seeking funding, you should probably be better off incorporating your company, creating a product prototype, getting your domain name set up, creating business cards, getting your website sailing, and finding your customer base. The Probability is high that it will take a few months more, but if you raise capital after all these, probability of raising that capital to a much higher valuation is also on the higher side than if you’re just raising capital off an idea alone.
Also, it is very important to bootstrap first, because if you can’t play on your own money, how can you enter the gamble of investing other’s money on your own idea.
Now everything is done, and you are expecting an investment round of $1 Million, make sure you pass all these parameters:
- For a social company, there have to be having at least 100,000 downloads and/or signups before going over a million-dollar round.
- For an e-commerce company, you should be having a revenue of $30K-$50k/month.
- For enterprise company, investors would be interested only if you are having at least 1,000 paid seats at $10/seat/month.
- Unless and until you are having a proven entrepreneur on-board, make sure you are having very strong traction background, as in the past few years traction seemed to be a front-line parameter for every capitalist.
- Make sure your revenue model is transparent enough to give an investor a clear insight about the elevator pitch.
Lets have a look at the total venture capital investment by the year 2010-14 Q3, credits: National Venture Capital Association
Also, these are the statistics for funding raised by Venture funds:
Most of all just put yourself in the shoes of an investor and visualize why would you be funding anywhere, on which basis and then try to find an answer, it will help you a lot too.