5 Things Entrepreneurs Need to Know When Raising CapitalThe article gives advice what entrepreneurs need to consider when raising capital for their business.

In the U.S., 2021 has been a record-shattering year for entrepreneurship. The number of entrepreneurs has soared as people seek out new jobs and more fulfillment in their careers and in their lives.Crunchbasereports that venture capital funding went through the roof in the first half of the year, with more than $288 billion invested globally, surpassing the already unprecedented second half of 2020 by nearly $110 billion. This is good news for most entrepreneurs who have traditionally dipped into their own savings to get their business up and running or have raised money using their network of friends and family, both of which can be limiting and incredibly risky. The average small businessrequiresabout $10,000 in startup capital, according to the Wells Fargo Small Business Index, but in reality most start out with less than $5,000—meaning that personal networks aren't enough and additional capital is necessary.

As the U.S. experiences this amazing resurgence, here are a few tips I've learned firsthand to help entrepreneurs succeed in securing their first round of capital as they start their business.

1. Determine if your idea is viable

Before you even think about fundraising, there are steps you should take to understand the industry you're entering and determine if your idea is feasible.Don't let your passion for your idea or your eagerness to get started interfere with your ability to objectively evaluate your idea and determine if it could be sustainable. I have two words for you: market research. Conducting market research is the most effective way to gain insight into the industry you're entering, gauge demand, understand the competition, and determine the size of the opportunity. This is where you should devote significant resources in the early stage—trust me, you'll thank yourself later.

Know your audience

Truly understanding your customers is the most important thing you can do to establish the direction of your brand. Who are you catering your product or service to and why? What does this segment need and want? How are you going to reach them? Knowing your audience is also critical to fundraising. Familiarize yourself with the investors you're pitching to, their business, their values, and what other businesses they've invested in to understand if they might be interested in yours. You want to know who you're potentially taking money from and if they will be the right fit for you. Taking the time to know your customer and your investor audience up front will save you lots of time and effort and set you up for success.

Related:4 Phases of Market Research to Ensure Success

Assess scalability

Ask yourself if your product or service is addressing a gap in the market. If it is, will that be sustainable? What's the competition like and how crowded is the market? And are you being transparent with what you offer and how much you're charging? In my experience, businesses that fail were steered by owners who weren't honest about pricing. Thoroughly exploring these questions will help you determine the scalability of your new business.

Learn from the mistakes of others

Entrepreneurs must have a complete understanding of the competitive landscape in their industry. Do a deep dive into the competition and trends. Understanding why others have failed in pursuit of a similar venture will indicate what you can avoid and give insight into how much room there is for your idea to succeed, so that you can update your business model early on.

Build a roadmap

If you want to compel investors to put their money and faith in your business, you'll need a detailed business plan. Among the standard business information, it should include the milestones you aim to reach and when. The more thorough your plan, the better. This not only helps you organize the trajectory of your business, but also lets investors in on your vision.

2. Create a polished presentation

When it comes to fundraising, first impressions are everything. Practice presenting so you appear confident and the passion for your business comes across to every potential investor in the room. You want to appeal to everyone and then pinpoint the partners who are the best fit.

Related:How Not to Overwhelm (Or Bore) Your Audience During Presentations

Get used to the virtual format

We recently held our Series C funding round for ZenBusiness virtually and, like other areas of business, I believe the virtual format is here to stay. Get acquainted with the process to avoid any technical errors, practice your presentation for consistency, and use the virtual format to your advantage when presenting.

Be straightforward

Investors are extremely busy and you don't want to waste their time. Be straightforward and address the important facts upfront. This might be a summary of details like market opportunity, how your product fills a gap in the market, or how you plan to distinguish your company from the competition—and save going into more detail for later in the presentation.

Prioritize the story over the statistics

Investors see a lot of presentations, so adding a human element to your story can differentiate you from other businesses. There will be time to share the necessary figures to prospective investors, so don't sacrifice or gloss over the humanity of your story or vision.

Be proactive

As you present, observe your audience and adjust your presentation as needed based on their reactions. Anticipate and address questions that investors might discuss among themselves after your presentation.

3. Compel through data

Make sure your data is presented in a compelling narrative. Any data on any sales or revenue, customer acquisition, market opportunity, or other metrics are important to highlight and should tie in with the overall vision you're selling, rather than serve as extra information. When investors understand and believe in your vision, it increases the value of what you're selling. You want your audience to get a cohesive and compelling narrative so they want to join in.

4. Play to your personal strengths

信誉就是一切。如果你已经有了great reputation as a founder, investors will feel confident in your ability to succeed. Without that, you will need to prove yourself in other ways. Highlight other impressive accolades, perhaps a stellar education or a standout team behind you. Be yourself and be vulnerable. Investors want to hear the story of your journey, how you got to where you are, and what inspired you to pursue your dream. As your company scales, your reputation will speak for itself and future investors will want to back you on that alone.

Related:Turn Your Vulnerabilities Into Leadership Strengths in 3 Steps

5. Embrace the pursuit

I'm often asked how you know when it's the right time to fundraise. A huge part of entrepreneurship requires constant networking and putting yourself out there to open opportunities. When it comes to fundraising, you should not wait for everything to be perfect—because it's never going to be.

There's no rule for when it's the right time to look for investment. Once you have an impressive, memorable pitch and some customer traction to prove demand, you can be confident that you're ready to speak with potential investors and demonstrate how they'll get a return.

Look for opportunities to network. When you're starting a business, word of mouth can be extremely effective in finding both investors and customers. At the end of a pitch, ask if there's anyone else they know who might be interested, even if those investors pass.

Aggressively go after your dream

Once you're confident that you've put in all the critical upfront work and you're ready to raise capital, it's time to tenaciously go after your dream. The goal is to raise money as quickly as possible and the speed of that process will create positive momentum that will take your business from idea to reality and put you on track for the next challenge: scaling your business.