Tech startups overcome the biggest roadblocks in funding

By Pau Castillo

Published: Mon 13 Mar 2023, 2:09 PM

Last updated: Mon 13 Mar 2023, 2:12 PM

Securing funds for business ventures can be a difficult and overwhelming task. Many entrepreneurs must navigate a complicated and competitive landscape to secure the resources they need to start or grow their businesses. According to Investopedia, more than inadequate management, ineffective business planning, and marketing mishaps, the primary reason start-ups fail is the need for more funding or working capital.

Vikas Datt of CerraCap Ventures, a venture capital firm based in Costa Mesa, California, investing globally in early-stage B2B companies, shares his insights and techniques for startup companies to overcome the struggle of business funding.

How to secure funding from venture capital firms

According to Datt, securing business funds from venture companies like CerraCap Ventures can be a vital asset to businesses needing financial assistance. Venture capital firms are established institutions that can provide the necessary resources and networks to help struggling startups become successful in funding.

Datt explains that the investment decision ultimately comes down to three aspects: the fit, the founder, and the founder's ability to convey his or her vision.

Some key aspects of how to raise money are given below.

Identify the market gap

According to Datt, businesses’ first step is to make a comprehensive market assessment of the need and identify how to address it. It is important to understand what gap you are filling in the market, which provides step improvement for your customers. Marginal value like cutting costs by 10 per cent is not enough. Founders need to identify a sustainable business advantage. Once you have a good business model you need to be able to articulate the same to your investors.

Demonstrate expertise through a good pitch

Datt emphasises that 'The Pitch' is one of the key components for businesses to raise funds. Over his years of experience, he found that most pitches are poor because they are unable to communicate a coherent picture of the problem they are trying to solve, the market, how they are different, and how they will make money.

Datt enumerates ways how to make a pitch that will leave businesses with a yes from their potential investors.

Preparation is the key - Datt explains that before diving into the actual pitch, founders should poke the potential investor’s interests by asking some relevant and leading questions. This can build rapport and establish a connection. He also advises founders to prepare different types of pitches. Depending on the mood of the meeting, founders can deliver a long pitch, a short pitch, a funny pitch, or even a serious one. Having all these at hand can help founders be prepared whatever the situation may give.

Know your story - Datt shares that aside from figures and numbers, the ‘story’ is what really matters, and sometimes, what mostly is remembered. “Think of your interesting events and personal experiences and share your journey. There is nothing more powerful than a good story,” he adds.

Do not leave the facts - A touching and remarkable story can be even more powerful when supported by facts. According to Datt, founders should be prepared to answer questions relating to venture capital facts such as burn rate, how much is the ramp, what’s the valuation, etc. They should know numbers and not answer with ‘it depends.’ Datt adds, “Knowing these facts gives a sense that you have a grip on the business and the industry.”

Follow up - Datt also advises founders to prepare an engagement plan – a plan that will determine how they will keep their future investors still engaged even after the pitching. Founders can share the latest news about the company, ask their advice on something strategic, or share an interesting article.

Every startup, including today’s unicorns, has and will face rejections. Datt advises that if businesses get “no” for an answer, they must not stop. Rather, ask for one-to-one feedback and references, and keep the investors updated on their progress. He adds that fundraising should not just be a one-time exercise but a continuous action for companies. And having a good pitch will increase your chances for success.

Overcoming the roadblocks of funding with CerraCap Ventures

CerraCap Ventures is a venture company that raises capital through financial institutions, family offices, and HNIs and uses it to fund early-stage technology companies. It focuses on investee companies in the areas of cyber security, healthcare, and enterprise software.

Through Cerracap Ventures’ sale-scale model, they lead their investee companies to high-level and industrialised processes to create win-win outcomes. The model consists of a specialised ecosystem of highly influential and global advisors facilitating mentorship, granting a huge advantage over the competition. It also involves the CXO Council, which consists of C-Suite leadership from Fortune 500 Companies.

“This access to a vast network of industry contacts is valuable in helping start-ups find the right partners and advisors. Our partner networks can provide valuable advice and guidance on key decisions, such as when to launch a product, how to negotiate deals, and when to enter new markets. All these, in return, can pave the way to leads that drive more sales in the business,” Datt explains.

“Our process in CerraCap Ventures is unlike any other venture capital industry. When most make introductions, we bring purchase orders,” he adds.

Funding is a critical factor for any business. A good pitch can help companies succeed in securing funding, allowing founders to focus on improving their systems and services instead of worrying about business funds.

Pau Castillo is the content strategist at Baden Bower.

More news from KT Network