Topic: Exploring Seed Investors: A Critical Step for Startups

Seed funding has become the latest buzzword in the world of entrepreneurial ventures, and rightly so. Seed funding, as the name suggests, is generally funding given to the startups during the ideation, inception or beginning stage, when the business is just a product idea undergoing a market validation phase. 

This article will explore some seed funding essentials and why it is crucial for startups. We will cover the fundamentals of seed funding, starting from what it is to why it is so important and how to find the right seed investors for your startup. 

What Does Seed Funding even mean? 

Seed Funding is an early-stage funding process and is different from growth-stage funding as it is the investment made in the formation stage when the startup has not yet proved its merit in the market. It is the investment made by an angel investor, who is essentially a wealthy individual willing to take the risk of investing in a new business at its ideation or early stages. 

Challenges in Early Stage Funding

Now that we have discussed seed funding let us first understand the challenges that startups usually face during the early-stage funding process:

Product: Since the startup is still in the ideation or pre-revenue phase, it usually has a negligible brand value. Their inability to access funding can hinder the process of developing the minimum viable product (MVP) for market testing.

Customers: At this stage, startups usually struggle with market acquisition, acceptance and customer trust.

Process: Novice founders may sometimes lack the expertise to form a core team and regularise the process. Startups usually struggle when onboarding the right human resources and setting processes.

Business Model: The lack of a fully developed product/service can make financial projections difficult for the startups. Projecting the revenue channels and unit economics and forming a comprehensive business model may take time.

What makes Seed Funding so crucial? 

In the ideation stage, capital, validation and mentorship are the three important requisites for the startup. Seed funding can provide startups with all these valuable resources to help them grow. 

Here is what makes seed funding so crucial:

Capital

Funding and resources are the most important prerequisites for any business venture. Securing seed investment provides the economic resources required to develop the goods and services and materialize the business ideas into existence. 

Validation

In the pre-growth phase, idea validation becomes increasingly important because it helps your startup realize that there is a viable demand for their products or services and their business strategy is sound. 

Mentorship

Seed funding can be a crucial way of getting mentorship in the initial years of your business. The advice and expertise of investors are just as important as financial capital, and it goes a long way in helping startups avoid making critical mistakes during the initial stages. 

How to Connect with Seed Investors: 

Now that we have understood what seed funding is and why it is so important let us talk about some tips that can help startups in connecting with seed investors. 

So here are ways to find and connect with the perfect seed investor for your startup: 

#1) Networking: Networking plays a very crucial role in business. Startup founders can connect with angel investors via LinkedIn, or they can reach out to their network. Founders can talk to their friends and families to find a potential seed investor. They can also attend business conferences and startup events to upscale their networking game. 

#2) Social media presence: In the current age of technology, online presence has become a game changer. Create a professional website for your company and be active on all of your company’s social media handles, such as LinkedIn, Instagram, Facebook and so on. This helps draw investors’ attention to your company and may help you in connecting with seed investors. 

#3) Websites for finding seed investors: Some online platforms help startups secure seed investments by assisting them to connect with the right investors. These companies generally have a large database of angel investors.

Below is the list of some such websites: 

  #1. AngelList 

  #2 Chennai Angels 

  #3 Let’s venture 

  #4 Venture Catalysts

  #5 Mumbai Angels 

  #6 Gust

  #7 Angel Forum

  #8 Funded

  #9 Envestors

Ways to Ensure a Seed Investment: 

Now that we have understood how to look for potential seed investors let’s understand how we can ensure securing a seed investment by making a long-lasting impression on the investor:

#1 Persuasive Pitch Desk: Creating a persuasive deck is among the major seed funding essentials and can greatly influence your chances of landing an investment. It helps investors get an insight into your services and feel compelled to fund it. 

#2. Be cognizant when choosing investors: Do not just choose the first investor willing to invest in your company. Be aware of their expertise in the respective field, and if they have a history of investing in similar businesses, then it makes them even more of an ideal fit for your business. 

#3. Negotiation: The last and final step is to strike a deal with the investor and make sure to have a written contract so that your business doesn’t suffer later on. Also, don’t feel obliged to accept the deal if the deal doesn’t suit you. Don’t shy away from turning it down, as that will prevent long-term damage. 

Wrapping Up:

We hope these seed funding essentials help you better connect with the seed investors and secure the seed funding. Pre-seed and seed funds in the early stages of your business can help you get a headstart. However, getting the right investors on board is equally important as they help validate your offering and give you the financial support and mentorship you need. 

If you are a pre-seed startup struggling to connect with the right investors, we at Marquee Equity can help. We are a team of business analysts who work with startups to help them find their ideal investors. From assessing your investment needs to pitching the right investors, Marquee Equity has got it all covered for you. Contact us +1-213-600-0811 to learn more.

References :-

https://www.linkedin.com/pulse/finding-right-seed-investors-yourstartup-mostafa-shahat/

https://www.startupindia.gov.in/content/sih/en/bloglist/blogs/startup-india-seed-fund-scheme.html

https://in.godaddy.com/blog/10-sources-of-seed-funding-for-your-startup/

https://www.digitalocean.com/resources/article/what-is-pre-seed-funding