Having a great concept, great product or even a great idea is not enough if you are not able to sell it - so read on.
- Friends and Family
This has to be the first place you look for funding. This is the safest and the most reliable bet when raising funds. Dig through your relatives and close friends, try to find that rich uncle in your family and see what he can offer. In all my years of experience, I have noticed that it is the most easiest way to raise funds for any start up - not only that, it is the most safest in terms of any legal aspects if your business goes sideways. Best of all, you don't need to give guarantees and do a tonne of paperwork - your word will suffice.
- Commercial Investors
What if you can't find a family member to fund your dream project - in that case you need to reach out to the investor community at large - Mumbai Angels, Sequoia Capital, IAN, etc to name a few in India. The question is, how do you convert a potential investor into an actual one.
Persistence no doubt is the single most important factor. You need to identify the point man for any investor group and start following up with him. Investors are humans and like attention - give it to them. Contact them and develop a personal relationship. Getting the first meeting is the most important and persistence is the key to that. Get a meeting and 50% of the battle is won.
- Great User Interface
Once you have your first meeting scheduled, what next? Well, its very simple actually. Investors go through 100s of pitch presentations monthly and rarely have time to go over the details. They rarely look at the working model of the product - the first thing(and in quite a few cases the only thing) that attracts them is a great UI (User Interface). It is paramount that you get that right - a few bugs in the actual product is acceptable but a flawed UI will be reject outright. Get it right and 90% of your battle is won.
Nothing attracts an investors as much as a profitable prototype. If you have a small prototype - show it to them. It may be small in scale, all you need to show them is that it works and is profitable by itself. If you can convince them of this, your battle is won. The cheque is in hand with one last question - entry barriers.
- Know the entry barrier to your business
The biggest fear any investor has are other investors! What if another investor with deeper pockets starts a similar business - how will you beat him? You need to know the entry barriers to your business that can prevent competition from stopping you (atleast in the initial few years). If you can convince your investor on this final piece, you will have the cheque in hand.
If the above two options don't work for you another option to raise funds is to opt for Crowd Funding. Though personally I would advise against it especially if you are raising funds for projects in India because most people are not keen to crowd fund projects in India. Still if you have the time (as crowd funding can take over a few years) and are keen on trying, this is another option to consider to raise funds.
This is the last option that can help you raise funds if the ones above don't work. It is not actually an investment strategy but is more of a survival strategy (which seems to have worked for a few start ups). All you need to do is participate and win events for start ups. There is Nasscom's 10,000 start ups challenge, Microsoft Bizspark, Microsoft Code for Honour and many others which are starting to form a part of the annual calendar with handsome cash prizes. Nominate yourself in these and see if you can win the cash which can act as a great survival strategy.