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Applying for Funding: A Step By Step Checklist

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Applying for Funding: A Step By Step Checklist

Applying for funding is more than a case of having a few customers and a great idea; if you want to convince others that you and your business are worth investing in, you will have to show the thought and effort it takes to build a successful business case. Here is a checklist that you can use in preparation for a funding application:

1. Your Pitch

Your pitch should be a careful blend of product information, business research and include a personal CV. James Caan, Dragon’s Den judge and successful entrepreneur comments that funders and investors want to know that their money is in the hands of someone who has failed. This demonstrates that the entrepreneur knows the pain of failure and has learnt lessons from making mistakes. “Investors invest in people,” he says “not ideas. I want to know the credentials of the person that is going to be the custodian of my money”. Structure your pitch to have product/service related information, the credentials of the key individuals, market research, market positioning and financial breakdown.

2. Out with the Business Plan

Long, laborious business plans will bore your potential funders and investors but there is valuable information that needs to be shown. You can follow the steps of developing a business model canvas that will cover all the salient points that investors are interested in but won’t put them to sleep. Use a template that includes risk factors, customer segmentation and a financial model.

3. Sunk Costs

When you are asking for funding or investment, there is nothing that is more compelling than showing how much time and money that you have already invested into your business. Calculate what the opportunity costs were or the amount that pursuing this idea has cost you; had you stayed in a job or taken up other opportunities. This will quantify the sacrifices you have already made for your business.

4. Know What You Are Willing to Share

Every funder or investor, unless an angel, will want something in return. Be prepared to sacrifice a portion of equity, an interest repayment or a trade exchange for the funding you are seeking. Have an idea of the amounts you are willing to share with another party and where your breaking point is- know when the cost is too much and you are going to walk away.

5. Investor Profiling

Different investors are looking for different reasons to invest. Some have personal reasons why they would like to partner with your business and others are interested in the social impact that you may have on employment creation. Understand who your investor is and what their sweet spot will be in terms of your offering. Research the background of the venture capital company or angel investor, their current portfolio of investments, and what they can add to your business over and above a capital injection. This will direct the tone of your pitch as well as the most important points you should highlight in the short time that you have to get the attention of your perfect investor.

Entrepreneurs seeking funding in general and regarding specific initiatives such as ESD initiatives, should shop around for their perfect funding partner- don’t just take any offer that comes your way. There are several public/private partnerships which aim to stimulate economic growth by connecting businesses that require funding with suitable investors, as well as to educate applicants on best practices to follow to turn ideas into bankable business plans. Often the aim of these partnerships is to unlock the economic potential of a community as a whole by kick starting business the local startup pods and thereby providing stimulus for micro-economies in urban and rural areas and ultimately contributing to the growth of the economy.

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