I have had the experience of trying to raise money on the "street" for an interesting concept, with a prototype product, but a restricted market involving a nascent technology. So I speak from experience - we never did get funding, and here is why!
1. Management Team
People, people, people - talent, talent, talent - commitment, commitment, commitment. The management team, its composition, experience, dedication, competence and track record is the most critical element in raising capital. The management team can be supported by a strong board of advisors - an active one. Having core leadership, technical, sales and financial talent is the key to getting off on the right foot and to providing confidence to would-be investors. This may be costly if not everyone is a risk-taker - be prepared to give up equity. Sharing the pie helps provide it with filling.
2. Value Proposition
What is it that you are offering of value? This defines you fundamentally in business - what value can you bring to the marketplace? Who is the customer? Why would they buy your product or service? Can you prove it? Have you enlisted some initial customers? What are the elements in the value chain? How can you justify and defend your link in the chain? This has to be so easy to understand, so compelling and so real the investor can touch it - yes, a prototype certainly helps.
3. Business Plan
The business plan needs to be articulate, brief, and compelling. Reading this document should be like reading a Stephen King horror novel - you just can't put it down. The financials have to be credible, realistic and supportable. Competitive and market analysis should be reflected in your strategies, objectives, and milestones. This is how you communicate with your audience. Make it a Best Seller!
These are the main points that I want to introduce to you. Other considerations include how much of your own money you have sacrificed, your background and industry knowledge, and of course, that elusive track-record. Don't take NO for an answer and remember to practice on those who matter the least.
Good Luck!!
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