I need funds for my idea to flourish. How should I approach VC's or any other financial institute to fund my project?
I am not an expert programmer though i know some basics as I had completed my engineering from India where i currently live. I have couple of ideas about developing a social media site however here in India I am not sure how to approach a Venture capitalist who would like to fund my idea - as to develop this I would need resources including developers, server support , servers and applications which would be expensive for me to fund. Please help me understand the right approach that i should take
You first need to identify VCs that would be interested in funding your idea. A strategic match is important. VCs will fund your idea only if it matches with their goals. You will need to look for VCs that fund start ups and provide seed funding or incubation funding.
Additionally, you will need to research the VCs from who is the point of contact, why would they fund you, application process, do you know anyone inside the system, amount of funding the VC provides, type of funding. Once you do this you will need to go through the formal application process and apply.
Hope my answer has been of help to you. Good luck!
First of all, you need to put some further thought into where you would like to take your endeavor. Next, you'll have to come up with a business plan complete with projected revenue expectation. Before putting this out to a VC, try doing some crowd funding. There are numerous sites that you can set yourself you on to get the funding you will need.
However, if this idea is still in its infancy, try going to a university or a school specializing in technology and look for some student developers, ect that can help put your ideas to work. Get your product together and then you can try the VC route.
When going to any source of funding, make sure you have a Business Plan. VCs are not looking for the "business plan on a napkin", but a full blown 20+ page report that details:
• Executive Summary including Mission & Objectives
• Company Summary including Company Ownership & Start-up Summary
• Products or Services Offered
• Market Analysis Summary including Market Segmentation & Target Market Segment Strategy
• Strategy and Implementation including Sales Strategy, Sales Forecast, Competitive Edge & Milestones
• Management Summary including Personnel
• Financial Plan including Important Assumptions, Projected Cash Flow, Break-even Analysis, Projected Profit and Loss, Projected Balance Sheet & Business Ratios
Kevin E McCormack
NivekTek Business Services - Your Business Solutions Provider
I would like to add to the other advice given that equity based crowdfunding is another option for you to raise early (idea stage) funding; where by you give away equity to raise investment. NESTA have a good web site summarising the crowdfunding sites out there - www.crowdingin.com. Two good equity based Crowdfunding sites are www.seedrs.com and www.crowdcube.com; however I am not sure whether they currently allow investment in companies in India.
An equity based crowdfung campaign would give you far more than just (hopefully investment), e.g. feedback and critical analysis of your plans, suggestions for improvement and if successful a base of loyal cheerleaders.
As a number of folks pointed out, VC's are reluctant to fund ideas. They fund execution of ideas by teams. Even then, they do it badly with about 15% on average being the success of VC funded ventures. Crowdfunding on the other hand is much more successful (upwards of 40%). Why? Crowdfunding empowers people already committed to the success of your venture to help make it happen. We provide an investor protection program to ventures (the Crowdfund Guarantee) to entice such investors who want to see the venture succeed and don't want to risk their principal to do so. How do you start? Get 150 people as excited about your idea as you are. That will help you:
1. Validate your idea is worthy and has a market (at least of 150)
2. Uncover any weaknesses you can't find on your own
3. Provide valuable members to add to your team.
If you gain from your 150 their commitment that, on the day you debut your campaign they will pledge what they can in the first 2 hours, you're ready to start your campaign. If you achieve, from those pledges, 30% of your needed funds, your statistically 90% likely to get the rest.
So you're job, it's actually fun for entrepreneurs, is to find 150 kindred spirits who want to see your great idea become a reality. When you've done that, it's my job to ensure they can't lose backing you.
Here's wishing you much success. Achieve!
VC's don't normally fund ideas, unless you and your team have a strong track record of making them money in the past. If this is not the case, then the best thing you can do, as someone else here already said, it bootstrap the operation to get to at least a prototype state. Also, as others have stated, any time you ask someone else for money you need to be prepared. Do your homework and develop a business plan that shows what it takes to succeed, why it will be successful and how much return on investment is likely. Without these basics, no one will lend or give you money.
Once you are prepared with a plan and some demonstration of your idea, there are many options open to you and VCs are just one. Other options include development partners that may help to bring your idea to the next level in exchange for equity (and perhaps some money), grants, Angel seed funds, and many more. Seek the advise of a person who has already invested in your specific market area.
These days, competition for funding is fierce. In order to obtain financing from a VC, you're going to have to have much more than an idea. Many of the startups that receive Series A funding are much farther along than their historical counterparts, most likely as a result of the stronger competition. You will do better to bootstrap your idea and put off seeking external funding until you have more than an idea.
You need a business plan! The best business plan possible. These all start with research! Researching and finding out exactly the amount of money you need and what will it be used for. This includes everything! From staff, software, servers, developers, marketing, equipment, and paying yourself! Have accurate and realistic projections as to when you will break-even and when will these investors see a return. And the research to that supports your product/service, your competitors, how are you different, etc. Take your time and research. The more you know the more confident you will be and the quicker you can shoot an answer right back at any question a VC or lending institution will throw at you! Your confidence will give them confidence but it has to be real and saying "just trust me" will get you nowhere! Don't be afraid to ask for a high amount either. Ask for whatever you need to ensure it's success.
You can try a kickstarter campaign.
VC's want to see numbers, just like a bank. Bootstrap-it, in order to make a basic site that begins to see traction. Once the VC sees some traction, their interest will rise, and so will their wallet.