Steps by step process of Fundraising

10 Steps of the Fundraising Process - Full information

steps-by-step-process-of-fundraising


Step By Step Process Of Fundraising | 10 Steps for Start-Up Funding

We tell you business ideas and ways to grow that business. Today our topic is Steps by step process of Fundraising, we have talked about fundraising before. Last time we said sources of fundraising and now we will tell you steps of fundraising. Today we will tell you some steps where we will discuss with you about fundraising, such steps you have seen only in premium content but today we will provide you these steps about fundraising for free. So read this post in its entirety so that you can know all the information about fundraising.

You need to create a legal structure for your Business

If your Proprietary company or Partnership company or Limited liability Partnership means what we call LLP, you cannot fundraise if your company is of this type. You can only do fundraising in a Private limited company or a Public limited company. PE&VC can later invest money in a Private limited company and if there is an IPO then you have to go to a Public limited company for this. First fix the legal structure of your company.

Market research

Now do market research. Research how many customers you have in your market. If you have a cab company then see how many customers you have in the market to take your cab service and if you have any food company then look at the same number of customers to take that food service. First do a good market research such as -

  • Market reach?
  • Number of customer?
  • Market size?
  • Problem you are solving?
  • How you can earn revenue from the market?
  • Market positioning?
  • ROI?
  • Break even in how many days?
  • Profitability?
Then take an MBA Finance or a chartered accountant, if there is such a person in your local area then you hire them, or if you have a friend you hire him. See your computed advantage Leaving the competition, see why customers are coming to you. Then look

  • What is your vision?
  • What is your future plan?
  • How many staff do you want?
  • How do you like technology?

When all these are ready, you will go to the next step.

Budget sheet

When you go to an investor, that investor will check your budget sheet. Because the investor will check your budget sheet to see what you want the money for. You will take the money from the investor because it is yours

  • Manpower is required
  • Legal expenses
  • Training
  • Marketing
  • Payroll
  • For Sales Advertising
  • HR
  • Technology

You need to have answers to some questions

Budget sheet question

  • Write down what you will do with the money, because investors will believe when you say so.
  • How do you use that money?
  • How much money do you want?
  • Where and how much budget will be spent?
  • How to optimize these costs?
  • How to do more at a lower cost?

To do all this, the investor must first convince you of your idea

Example: If you need 50 rupees then you show the investor 10 rupees you are paying and ten rupees your partner is giving. We are also investing our money and give the remaining 30 rupees to you. Then that investor will trust you a little, then the investor will take interest to talk to you. And if you say that we will not pay any money from us, you have to pay the whole money (meaning you have to pay the investor) then it can be a mess.


Find the right Investor for your Industry

When you have completed the steps first, then you research which investor is in your industry.

  • Technology
  • Education
  • E-commerce
  • FMCG
  • Pharma
  • Clothing
  • B2B
  • B2C
Each case is installed separately, for this you have to go to the right investor, there are many investment bankers for this. The investment banker will take only some commission, if the investment banker gives you 200 rupees from the investor, then he will take 2% commission. Then according to that calculation the investment banker will take a commission of 4 rupees. Investment banker is what we know as broker in simple words, we call it investment banker or I-banker or merchant banker in business language.

Such as:

  • Sequoia Capital - Fintech
  • RPG Ventures - FMCG or Health & Wellness
  • Accel Partners - E-commerce
  • Nexus Ventures - Consumer business service
First look at which industry your business is based on.

Create a pitch deck

What do you say to an investor when you approach an investor? - That means 

Pitch - means to say something
Deck - means presentation

When you convince him, you must first tell him -
  • How much money do you want?
  • Why do you want money?
  • And how do you spend that money
Then you have to explain to him how he will take the Prophet from here, it is called Pitch Deck. Here you will also tell how you will bring the first 100 customers and then how you will bring the customers, you will mention all this.

  1. First, create a simple cover page
  2. Then give the team information there
  3. Give details of the product and technology
  4. Business model
  5. Competitive landscape means how many more people are around in this same business model.
  6. Current financials
  7. Market size opportunity
  8. Shareholder information

Perfect your investor pitch

How to perfect your investor pitch first -

  • Peach investor
  • Proceed
  • Compose an email
  • Present yourself
  • Present Your team
  • Respond to you
  • Go ahead
Usually you have to keep an eye on some mistakes for these.

  • Never say 'you have no competitor'
  • Do not give unrealistic projection
  • Don't lack clarity
  • Don't take criticism personally
  • Conservative number
  • Tell compelling Brand story
  • Keep it simple
  • Exit strategy

Term sheet

Term Sheet of Fundraising is decided

  • How much money can you invest?
  • How long will it take?
  • What percentage of shares will the investor who comes?
  • What will be the rights between the two parties?
All this is complete then go to the next step.

Due Diligence


Then the investor verifies what you have claimed. Then check your background. In this industry it is called 'Trust But Verify', which means that the investor will believe you but will still verify you.

  • Understand business process
  • Evaluate business model
  • Decide binding agreement
  • Check finance - Here you will see your profit and loss, cash flow statement, balance sheet, exiting loan, revenue, check margin, inventory turnover ratio, Debt-to-equity Ratio, current ratio, if you have any such problem. Before that you will solve those problems with a chartered accountant.
  • Legal- case on promoter, register of Companies, relationship with banks, cheque dishonour/bounce
All of this is checked by an investor before investing. Then after all these steps are completed, enter the next step.

Shareholder agreement | share subscription agreement


There are two types of agreement when buying shares

  1. Shareholder agreement
  2. Share subscription agreement

shareholder agreement

The shareholder agreement will state who has what rights, and who will be responsible for what, the shareholder agreement is of many pages. The Term Sheet is one or two pages long, the Term Sheet is not very large but the shareholder agreement can be more than 100-200 pages. This is the document where all the relationships will be written by you. You will have written in these pages -

  • Rights
  • Duties
  • Jurisdiction
  • Arbitration
  • Event of default

Share subscription agreement

  • How many shares have been taken
  • What company shares bought
  • Company stake
All these will be written in the share subscription agreement.

Investor relation

If you still do not get the money even after the shareholder agreement, then you need to keep the investor relationship good. And even if you get the money, you still need to have a good investor relationship. Because if the relationship is good, you can grow faster. Then you have to send all the information to your exiting investors -
  • Report
  • Growth
  • Data / MIS Report
  • New project

Again if you still need more investment then you need a new inverter
  • To create achievement
  • News
  • Relationships
Because one investor brings in another investor, not directly, but indirectly that investor brings in another investor.

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