By now, the COVID-19 pandemic had already battered the global economy, and startups faced significant challenges. Supply chains were disrupted, consumer demand plummeted, and everything moved online, leaving hundreds of startups struggling to raise enough funding or losing their sources of revenue. However, a few startups managed not only to survive but to flourish by adapting their startup fundraising strategies and creating long-term value. Their success highlights the importance of mastering the art of fundraising in challenging times.

Most importantly, a comprehensive breakdown of how to protect your startup in the current times, and what the future holds for us all when it comes to fundraising.

Key Strategies For Startup Fundraising

Following are the key strategies for startup fundraising:

1. Angel Networks vs Venture Capital 

The type of investor you go for during these times is everything. Angel investors are different from VCs because of the way they support startups; thus, it will be important to choose the type of investor that best suits your startup.

– Angel Investors: Angel Investors are more friendly and sympathetic; they have a self-realization that all do not operate as this would always be. That means investing with one’s own money, and indeed they may be willing to support pre-seed stage startups; however, their funding can be lighter compared to venture capital.

– Venture Capital firms: Greater sums of money are brought in by venture capital, but with faster expansion come often higher control demands. They put money into new businesses that have already begun to take off.

Tip: An angel investor might be the greatest choice if you’re just starting out and need mentoring. Venture money is the ideal option if you need a large infusion of funding and are scaling quickly.

2. Discussion on Term Sheets and Negotiations 

It is therefore more crucial than ever to negotiate investment arrangements under the COVID-19 scenario. A term sheet, which is a written agreement outlining every detail of an investment, needs to be carefully examined.

It’s relevant to keep the focus on:

– Equity stakes: At founding, don’t give away too much too early.

– Valuation: It should also be updated as per the realistic market condition.

– Control terms: Do not give up so much control over your startup that you get pushed aside.

Tip: Hire an attorney experienced in startup investments to help you negotiate the best deal.

3. Use Investor Money Only as a Booster 

Every penny counts during a pandemic. Investor money should be a booster, not the only lifeline on which your business hangs. Use it judiciously to fund projects that promise growth in a sustainable manner.

– Invest in technology upgrades that provide added efficiency.

– Financing of marketing strategies that correspond to new consumer behaviors.

This means expanding operations into digital channels to capture the growing demand for online service delivery.

Tip: Instead of merely focusing your funds on short-term benefits, focus on using the money as a strategic lever in solving very significant company problems that will fuel your long-term success.

For fundraising check investor approved pitch deck

4. Focus on Diversification 

The bottom line is this: pandemics have shown us that all our eggs should not be in one basket. Product, service, and revenue diversification are the things that will safeguard your business against disruptions in the future.

– Enter new markets or industries.

– Diversify revenues by developing as many revenue streams as possible and refrain from total reliance on one source.

– Be adaptable to varying consumer needs and adjust your offerings accordingly.

hint: Diversification geographically when your market is in a slump may help. Opening to international markets may translate to enormous opportunities.

5. Not the Courage of Abandoning 

Being an entrepreneur requires perseverance, and the epidemic put every startup founder’s bravery to the test. When facing the prospect of a financial meltdown, perseverance makes all the difference.

– Be adaptable: Take brief breaks to adjust your plan of action if needed, but don’t abandon the current task.

– Maintain team motivation: A driven team is one of the main things your startup is built on.

– Seek out opportunities: Market gaps are frequently created by crises.

Tip: Be steadfast; challenges could arise, but take measured chances to keep your startup alive.

6. Create Value, Not Just Valuations 

When times are uncertain, creating real value pays more dividends than chasing sky-high valuations. Investors are certain to flock to startups solving real problems in the real world.

– The focus should be on gaining the trust and loyalty of the customer.

– Develop a product or service offering that truly addresses the needs of your target market.

Value creation gives a long-term sustainable business, whereas inflated valuations may not stand up to disruptions in the market.

It’s wise to consider more than just what will increase your short-term valuation and consider how you can actually add value for your partners and users.

7. Choosing the Right Incubator and Accelerator

Therefore, if your company is still in its early stages, joining an incubator or accelerator could provide much-needed financing, connections, and coaching. But times have changed in the pandemic era for incubators and accelerators themselves.

– Incubators are best serving the needs of early-stage startups that need mentorship, space, and business resources.

– Ideally, accelerators are for those kinds of startups that have a certain traction going on and seek more capital to access scaling opportunities.

Tip: It is worth mentioning here that choosing incubators and accelerators based on your industry or powerful networks of mentors and investors is important, as they will lead you through the worst times.

8. Dare to Dream Big 

It’s the big dreams that even today-when largely struggling from the pandemic-play a crucial role in the success of any startup. Founders are far-sighted in their thinking, bold in their ideas, and imaginative in their approach to emerging from crises even stronger.

– Go beyond just survival: Set up your business for success after the epidemic by identifying growth prospects that coincide with long-term trends.

– Bold to innovate: To set your startup apart, stick with cutting-edge concepts and innovations.

Key Stakeholder Tip: Your dream should involve not only short-term survival but long-term impact. Emphasize how your startup can leave a legacy in your industry or society.

Check out more about startup fundraising strategies

Conclusion 

Although the epidemic has presented previously unheard-of difficulties, it has also highlighted the need for resilience, adaptability, and creativity in the startup industry. Selecting the appropriate investors, using good judgment while negotiating, and generating value through diversification can all help to facilitate this further.

In times of distress, fundraising is not difficult. It does require a calculated approach, a great deal of bravery, and unwavering faith in your goal. Dream large. Quickly adjust. Construct intelligently.

Today, with technology advancing at an unprecedented rate, fundraising is undergoing a revolution of its own. Conventional fundraising methods included direct mail campaigns, phone calls, and in-person events. Today, these methods are replaced by a range of tech-dependent services designed to maximize efficiency, broaden donor reach, and improve donor experience. Developments in blockchain technology, such as programmatic crowdfunding, reciprocity-based barter fundraising, artificial intelligence (AI) blockchain fundraising, and others, point to the beginning of a new phase of digitalization in the financing industry.

This blog explores the key technological trends that are changing fundraising and enabling firms, startups, and nonprofits land, to fund their business is otherwise low in a global market like today.

Tech Innovations and Trends For the Future of Fundraising

Following are the Tech Innovations and Trends for the Future of Fundraising:-

1. Online Crowdfunding Platforms

Crowdfunding platforms such as Kickstarter, Indiegogo, and GoFundMe have revolutionized the way individuals and organizations raise funds. These platforms allow users to pitch their projects or causes directly to the public, leveraging the power of social networks to generate financial support. What was once considered a niche method for raising capital has now become mainstream, with billions of dollars raised annually through these platforms.

The future of crowdfunding looks even more promising, as emerging technologies like blockchain are being integrated into these platforms. Blockchain can provide enhanced transparency and security for transactions, allowing donors and investors to track where their money is going. The tokenization of assets, made possible through blockchain, will also allow for new ways of structuring crowdfunding campaigns, making them more flexible and accessible to a global audience.

2. Security Token Offerings (STOs)

Security Token Offerings (STOs) are poised to revolutionize the way companies raise capital. Unlike traditional Initial Public Offerings (IPOs), STOs use blockchain technology to issue tokens that represent legal ownership in an asset. These tokens can then be sold to investors worldwide, allowing companies to raise capital without going through the lengthy and costly process of an IPO.

One of the main advantages of STOs is their compliance with regulatory frameworks like the SEC in the United States. This ensures that companies raising funds through STOs are doing so in a legal and transparent manner, reducing the risk of fraud and other illegal activities. As more businesses adopt this cutting-edge technology, STOs are expected to become a major force in the fundraising world, offering a faster, cheaper, and more secure way to raise capital.

3. Initial Coin Offerings (ICOs) and Initial Exchange Offerings (IEOs)

Initial Coin Offerings (ICOs) took the cryptocurrency world by storm a few years ago, allowing companies to raise funds by selling digital tokens to investors. However, ICOs have come under increased regulatory scrutiny in recent years, as concerns over fraud and market manipulation have grown.

In response to these concerns, Initial Exchange Offerings (IEOs) have emerged as a more secure alternative. IEOs are conducted through cryptocurrency exchanges, which vet the projects and ensure that they meet certain standards before allowing them to list their tokens. This added layer of security has made IEOs a more attractive option for investors, and they are expected to play a significant role in the growth of the cryptocurrency and blockchain space in the coming years.

4. Social Media Engagement

Social media has become an indispensable tool for fundraising, allowing organizations to reach a wider audience and connect with donors and investors in real time. Platforms like Facebook, Twitter, Instagram, and LinkedIn offer businesses the ability to run targeted ad campaigns, create engaging content, and build strong relationships with their followers.

In particular, social media allows for the amplification of fundraising efforts through organic reach. By encouraging followers to share campaigns with their networks, organizations can exponentially increase their visibility and attract more donors. Moreover, social media platforms are continually evolving, offering new features like live video, stories, and interactive polls that can enhance engagement and drive donations.

As digital marketing becomes increasingly important in the fundraising world, leveraging social media to its fullest potential will be critical for organizations looking to secure capital in the future.

5. Decentralized Finance (DeFi)

Decentralized Finance (DeFi) is one of the most exciting and disruptive innovations in the financial world. By using blockchain technology and smart contracts, DeFi platforms offer financial services such as lending, borrowing, and trading without the need for traditional intermediaries like banks.

For fundraising, DeFi presents a unique opportunity to raise capital outside of the traditional banking system. Businesses can use DeFi platforms to borrow funds, issue tokens, or even create new forms of digital assets that can be traded on decentralized exchanges. The transparency, security, and accessibility offered by DeFi make it an attractive option for companies looking to raise funds in a more efficient and cost-effective manner.

As DeFi technology matures, we can expect more businesses to explore its potential for fundraising, particularly in industries where traditional financing options may be limited.

6. Artificial Intelligence (AI) in Fundraising

AI is becoming an indispensable tool for organizations looking to optimize their fundraising efforts. From automating administrative tasks to analyzing data and segmenting donors, AI can dramatically improve the efficiency and effectiveness of fundraising campaigns.

One of the most valuable applications of AI in fundraising is the ability to create highly personalized donor experiences. By analyzing donor data, AI can help organizations identify patterns and trends, allowing them to tailor their messaging and outreach efforts to specific donor segments. This not only increases the likelihood of securing donations but also helps build stronger relationships with donors over time.

Moreover, AI can be used to predict donor behavior, allowing organizations to proactively engage with donors who are most likely to contribute to their campaigns. By automating these tasks, organizations can focus their resources on high-impact activities, ultimately improving their fundraising outcomes.

7. ESG Funds: Environmental, Social, and Governance

Environmental, Social, and Governance (ESG) investing is rapidly gaining popularity among investors who want to align their financial goals with their values. ESG fundraising focuses on companies and organizations that prioritize sustainability, social responsibility, and ethical governance practices.

As more investors seek to make a positive impact through their investments, organizations that embrace ESG principles are likely to attract greater funding. This trend is particularly relevant for nonprofits and businesses with a strong commitment to social and environmental causes, as they can leverage their mission-driven focus to appeal to socially conscious investors.

In addition to attracting new sources of funding, ESG fundraising can also enhance an organization’s reputation and credibility, making it a valuable strategy for long-term success.

8. Non-fungible Tokens (NFTs)

Non-fungible tokens (NFTs) have taken the digital world by storm, offering a new way to create and sell unique digital assets. Unlike cryptocurrencies, which are interchangeable, NFTs are one-of-a-kind and can be attached to digital or real-world objects, such as art, music, or experiences.

In the fundraising world, NFTs have been used in innovative ways to raise funds for various causes. For example, organizations can create limited-edition NFTs that donors can purchase, with proceeds going towards the organization’s mission. NFTs offer a way to engage donors in a more interactive and immersive manner, making fundraising campaigns more exciting and memorable.

As the use of NFTs continues to grow, we can expect to see more organizations leveraging this technology to enhance their fundraising efforts and appeal to a tech-savvy donor base.

9. Augmented and Virtual Reality (AR/VR)

Augmented reality (AR) and virtual reality (VR) technologies are creating new possibilities for immersive fundraising experiences. With AR and VR, organizations can offer donors the ability to explore projects, interact with beneficiaries, and experience the impact of their donations in real time.

For example, a nonprofit working on building schools in remote areas could use VR to give donors a virtual tour of the construction site, showing them the progress being made and the lives being changed by their contributions. This type of emotional connection can be a powerful motivator for donors, increasing their willingness to give and their sense of involvement in the cause.

As AR and VR technologies become more accessible, we can expect to see them play a larger role in fundraising events and campaigns, offering donors a deeper, more meaningful connection to the causes they support.

10. Mobile Fundraising Apps

Mobile technology has made fundraising more accessible than ever before. With mobile apps like GoFundMe, JustGiving, and Facebook Fundraisers, individuals and organizations can create and share crowdfunding campaigns directly from their smartphones, allowing donors to contribute with just a few taps.

These apps have streamlined the donation process, making it easier for people to support causes they care about. Moreover, mobile apps allow for real-time updates and notifications, keeping donors engaged and informed throughout the campaign.

As mobile technology continues to evolve, we can expect to see more innovative fundraising apps that offer new ways to connect with donors and raise funds on the go.

Know more about tech and innovation trends in fundraising

The Future of Fundraising

The future of fundraising is undoubtedly digital, with technology playing an increasingly important role in shaping how organizations connect with donors, raise capital, and achieve their goals. From blockchain and AI to AR/VR and NFTs, the possibilities for innovation are endless.

As businesses and nonprofits continue to adapt to this new fundraising landscape, moreover, those that embrace these emerging technologies will be well-positioned to succeed in the competitive world of fundraising. Ultimately, the key to success lies in staying ahead of the curve, leveraging technology to enhance donor engagement, streamline operations, and maximize the impact of every dollar raised.

In this new era of tech-driven fundraising, the opportunities for growth and innovation are limitless — and the future is brighter than ever.

Get Fundraising services for business now

The Indian startup ecosystem has seen the rise of deep tech startups as a significant force over the last few years, making profound impacts in verticals and the broader economy. These deep-tech startups, which are powered by cutting-edge technology including artificial intelligence (AI), machine learning (ML), blockchain, quantum computing, and robotics, are redefining the boundaries of innovation and contributing to what is shaping the new-age Indian economy.

An innovation of this magnitude is much more than a ripple; it is a wave that opens up novel avenues, disrupts long-established territories, and establishes India as the front-runner in techno-economic solutions worldwide. Keep reading to see how these deep-tech startups are quickly changing the face of the Indian economy.

Startups Transforming the Indian Economy

Following are the startups transforming the Indian Economy:

1. Fueling Innovation Across Industries

Deep-tech startups are playing a vital role in impacting the Indian economy in many ways and transforming sectors of our country through innovation is one of the best practices of it. Using novel technologies such as healthcare, agriculture, fintech, and manufacturing these startups disrupt traditional business models and processes.

– Healthcare: AI diagnostics, robotics-assisted surgeries, blockchain for secure medical records improving patient outcomes, and reducing costs
– Agriculture: Drones are still gaining significant traction and are now being more widely used to provide farmers with advanced technology such as drone mapping, data analytics, IoT technologies for optimized farming practices.
– Financial Services: Blockchain technology is used for more secure and transparent financial transactions, whereas AI and ML are being widely adopted for risk assessment and fraud detection.

Such technological enhancements are making Indian industries more efficient, competitive and globally aligned.

2. Creating High-Skilled Jobs and Attracting Global Talent

Deep-tech startups will continue to proliferate and generate thousands of high-skill jobs within the country. Deep-tech start-ups are responsible for >12% of the nation’s start-up environment and have access to a large proportion of engineers, investigators, R&D specialists as indicated by an investigation by NASSCOM.

– AI and ML Developers: Data scientists, and AI developers are in high demand as companies in all sectors require talent to build and maintain sophisticated algorithms.
– Robotics and Automation Engineers: undisputedly one of the most critical because with automation being so crucial to manufacturing and logistics, skilled robotic engineers are in the highest demand.
– Blockchain Developers: With more fintech and supply chain start-ups implementing blockchain for transaction security and product tracing, there is a strong increase in demand for developers with experience in Blockchain.

With a strong Innovation ecosystem, India is not only generating jobs locally but also bringing in global talent and investments.

3. Boosting the Economy with Investments and Exports

Deep-tech startups are instrumental in boosting economic growth, by attracting foreign investments and adding ons to the exports. India has seen a growth in funding available to startups working in deep-tech because VC and PE executives appreciate the potential of using intellectual property to build new companies.

– Foreign Direct Investment (FDI): The potential of the Indian deep-tech startups has attracted investments worth billions from global investors in the field of AI, blockchain, and quantum computing.
– Exports of Tech Solutions: Deep-tech startups in India are exporting tech solutions to the international stage and cyber security, AI driven software and Fintech are some of the leading areas.

These investments and exports not only contribute to the economy, but also position India as a global technology innovation hub.

4. Solving India’s Unique Challenges with Technology

While deep-tech startups develop tech-driven solutions to cater to the challenges specific to India, they are also helping improve some of the direst conditions in the country. For instance:

– Rural Connectivity: using satellite technology and wireless networks, startups are making the internet more accessible for poor rural communities, ultimately decreasing the digital divide.
– Clean Energy: As India has committed to clean energy, deep-tech startups are working in the areas of energy storage and distribution with the broader ecosystem parts.
– Smart Cities: Deep-tech companies are developing internet of things (IoT), artificial intelligence (AI) and data analytics technologies for more intelligent urban management around resource usage, traffic flow and infrastructure maintenance.

Deep-tech startups in the country are resolving these challenges and this is one way they contribute towards developing India and aiding in building a sustainable future.

5. Fostering an R&D Culture

The mindset of deep-tech startups are more focused towards research and development, and those kind of approaches and interventions comes from business is a must for long term vision. While traditional startups often rely on scaling and market domination as a key part of their business model, capital-light deep-tech focused enterprises tend to value spending substantially more on research and development (R&D) in order to create innovations that can change the industry.

– Collaboration with Academia: With some top Indian universities and research institutions, many deep-tech startups collaborate to receive the latest research discontinues nurturing innovation
– Government Support: The Indian government is supporting deep-tech startups by funding R&D-focused companies through initiatives like the Startup India program, and the National Research Foundation (NRF).

This focus on R&D, in turn, is not just paving the way for advancements in technology but fast establishing India as the innovation leader worldwide.

6. Enhancing India’s Image in World Competition

To begin with, deep-tech startups drive India to a greater competitive level on the world stage. Moreover, India has caught up with tech powerhouses like the USA, China, and Israel in terms of innovation in Artificial Intelligence (AI), Blockchain, Quantum Computing, etc.

– AI and Quantum Computing: India is emerging as a power-house for founding multi-national startups in the domains of AI and quantum computing.
– Global Partnerships: Is the new norm and Indian deep-tech start ups a forming strategic partners with global players taking the competitiveness/ reach to the next level.

These startups in turn are making India as an innovation hub leading the technology of future.

Check out all transformation in economy due to deep tech

Conclusion

Fast-paced Deep Tech Startups in India are rapidly bringing about a transformation of the Indian economy through innovation-led growth, job creation, attracting investments, and solving critical problems. In addition, they are bringing new solutions in multiple domains including AI, ML, blockchain, and quantum computing, which will undoubtedly change industries forever while simultaneously positioning India as a global tech leader. And with startups on the rise and stronger than ever, these firms will definitely to contribute to India’s business narrative and tech road map.
India has started its deep-tech journey and the future is as bright as the summer sun.

“Your vision is a story. It is how you revolutionize it, how well you imagine it, how amazingly you narrate it, and how often you innovate it.”

“The strength of the vision of your business model governs who will rule the game or the investors“

Are You Bringing A Revolution Or Playing A Safe Game?

Are we giving enough to satisfy the appetite of investors? As Myles Munroe, a speaker and an author correctly highlighted a striking difference between self-employed and an entrepreneur. Self-employed are the people working for themselves whereas, entrepreneurs are people who have a long-term vision and goals to achieve that vision.

So are the startups we innovating appropriately? Or are we going overboard with existing startup business models making money. We are experiencing a world with entry of new players in the existing business models itself. Everyone is making the hay while the sun is shining. Indian economy is flourishing with entry of aggregators, and every new business model is based on aggregation of products or services.

To move a step further, there is an aggregator model and then there is a grand-aggregator model (aggregator of aggregators) such as Trivago, aggregator of hotel aggregators and Cabto, aggregator of ride sharing aggregators. Are we awarding the players having the first mover advantage. Those who carried out extensive R&D to build demand, who took the risk in an unknown economy. However, startups really need to rejuvenate themselves to think beyond what is available. Does the business model you are choosing fall within your vision or are they just doing it because the industry is well tested and they can provide a new feature and make it look different? There is a bundle of instances I would highlight here:

And there are many other case studies such as Rigo, Truecabs, Cabby in Ride sharing; Spinny in used-car selling and others.

Are You Prepared Or Are You Just Ready?

As an entrepreneur one needs to keep in mind that is there any problem one is trying to resolve or is one tweaking the loopholes in existing startup business models. We need to empathize with the business models which closed down in their early years of operation. Research shows that nearly 90% of business models fail within their first 5 years of operation.

The major set-backs experienced by business models in the past were by the following:

The reasons stated by most news agencies for failure of business models are failing to innovate, lack of funding, lack of uniqueness, among others. No indian startup ever got shortlisted for Forbes’ 25 most innovative companies or Forbes Top 25 Innovative Growth companies. Why don’t we see rise of meta-level startups such as Google, Linkedin, Facebook, Whatsapp and Twitter.

Entrepreneurs need to think that are they just trying their hands on entrepreneurship or they have a vision and a dream to accomplish.

Investors Herd Mentality And Are We Living In An Investor-Biased World?

The point to ponder here is that all the businesses which failed had atleast one series of funding, which means someone believed in their story? That means if the business models were not unique and innovative, why would an investor invest money at the first place.

As an investor, did you think if you are investing in a business lead by an entrepreneur or a self employed? Are investors fell prey to fancy stories of manipulation and articulation narrated by some of the media companies today which showcase the startups as unique, adventurous while showcasing founders as superheroes.

Fund raising in startups has become a “game of confusion” which needs clarity at the earliest. To do this, thoroughly evaluate the entrepreneur’s vision by asking key questions: Is he ready for the next 10 years? Does he have a diversification plan or is it just a cash burn strategy relying on investors? Does he believe in his story? How prepared is he? Is he putting in the effort to achieve his goal or just burning the midnight oil?

Additionally, there is a slew of new era investors including many individual investors trying to make a buck out of demand-driven startup business models. So, when choosing investors, ask yourself: Is he the right fit? Has he helped his portfolio companies grow or led them to failure? Does he stand by his portfolio companies through thick and thin?

Fundraising: Let’s Clear The Air

Lets reiterate that there are no free lunches and lets learn from the demise of VG Siddhartha. When an entrepreneur raises funding, one is making him vulnerable and accountable to unknown band of investors. It’s a game where you end up diluting to the effect that the investors (strangers to you) take up majority of the stake in your own company. To exemplify this, Jeff Bezoz has 12% stake in Amazon, Flipkart founders had 5% stake, Ola founders have nearly 12% stake in their own company and others.

The flip side of this appears in stories like Uber’s co-founder Travis Kalanick resigning from his own company and Naresh Goyal stepping down and being barred from bidding for Jet Airways, which he founded in 1993. Cofounders of Flipkart resigned / stepped down after Walmart bought controlling stake, among other reasons.There are also other cases, such as Jack Dorsey’s resignation from Twitter and Andrew Mason stepping down from Groupon (now rebranded as nearbuy). In the wake of this, Oyo’s founder declined SoftBank’s offer to infuse USD1.1bn, fearing a loss of control. Therefore, it is of utmost importance to be more learned and mature while raising funds (startups) and providing funds (investors). While concluding this, we can state:

“Nothing can fail your business if you have a vision for next 10 years and you narrate the story of your vision well to those who could believe in you. Just remember business models might fail, dreams donot.”

Also Read – Business Continuity Plan

The need of the hour in a fast-paced startup environment where innovation meets aspiration is not advice & solutions from an army of consultants and investment bankers like never before. We are counselors at the front of the battlefield, traveling with entrepreneurs as they navigate their way through funding and growth. But the question remains: are we truly providing effective startup consulting with strategic, if not operational guidance, or simply skin-deep makeover in your pitch decks and valuation spreadsheets? We need to take another look around.

The path to investment banking is typically long and challenging. Investors and founders are required to invest prudently, which is what we expect them to do in the first place. We need to be more than just a conduit for raising money and try to maintain a closer working relationship with each of the startups we support. It requires boundless reading, counterintuitive critics, and steadfast dedication to stats and unparalleled business constructs.

And if we do want this transformation to really happen, we need to push ourselves to spend time and try to get a complete sense of our clients’ businesses. In turn, if we are properly aligned with where the founders live today and aspire to be in the future, it makes for a more aggressive ecosystem built around actual frameworks of success which will come not just by securing investment but also by building companies that can eventually grow, scale, sustain. In the sections to follow, we flesh out key learnings that can restructure the way consultants interact with startups; which in turn leads to a more contributive relationship.

Are You As A Consultant Providing The Right Direction To Startups?

The investment banking exercise is tedious and has a long gestation life. The closest to the founders are their consultants and investment bankers. We have the onus to deal with startups more responsibly and not waste time and efforts of investors and ourselves. Consultants need to be strategy partners for clients than merely try getting funds for the company. Most of the consultants take up an assignment and start deliberating on fancy pitchbooks and valuation models. This needs a transformation. Do a homework and lot of research on the business model, meet the management at least 2-3 times before taking up an assignment, make them aware of their success ratio of getting funds, and make the founders realize the business model lacks uniqueness (no client would like to listen to this, however, trust me they would still be happy to get insights and push themselves to make it different). Do you challenge the founders? As consultants, try taking up this useful exercise. Below are relevant observations and justifications.

Founder’s / Management’s Full-Time Role And Involvement In The Company

In case it’s a part-time business for the founders and there are no stakes involved for them to grow and flourish the business. 

Looking from the Investor’s Eye: The owner has to be hungry; needs to eat, drink, and sleep to take the business to the next level. Put your bet on the company or idea which is striving to make the business model profitable. In case the founders merely talk about “When can we get funds?” are the ones you need to filter out.

Monetization Of Business

Cash-burn businesses used to be the focus of the investors a couple of months ago. The investors today are more learned and cautious to invest merely based on the cash burn ratio. 

Looking from Investor’s Eye: As Consultant, segregate and analyse the cash burn based on client acquisition (this is a plus), extensive marketing (this is a minus as startups do not need expensive marketing, rather word of mouth, and social media marketing will be good to start with).

Background Research About The Business Model

When management is deep inside the business models, it is assumed that they would have researched about the business in depth. 

Looking from Investor’s Eye: Investors are keen to compare businesses so to analyze the scalability and replicability. An in-depth research of business models, revenue streams, international best practices, and domestic peer groups is a must. Founders need to be aware of pin to plane about all these aspects apart from evaluating the need and necessity of the business model.

Technology Intervention

How manual is the idea? Would it bring a disruption? Does the founder belong to the same/similar line of business? 

Looking from the Investor’s Eye: In case, the founders are not related, they might need a strategy partner or board of advisors from a similar line of business. After which one might explore technology intervention which could possibly transform the process. 

Vision Of The Management

Spend 1-2 hours to understand the vision of the management. The shortcut is before meeting ask them the vision to be written in 5 sentences with maximum 6-7 words. 

Looking from Investor’s Eye: The clarity, scalability and reliability in the vision statement is must for investors.

International Best Practices And Practical Adoption Of The Business In The Country Where It Is Located

How international peer group is working, are their best practices which could be replicable in your current business?

Looking from Investor’s Eye: Investors are largely driven by precedence as they are able to compare and envision the future.

Uniqueness In The Idea

What is the problem statement, and how unique is the idea? 

Looking from Investor’s Eye: In case, investors feel there are ample such business models, they might uprightly reject the idea. There might be an instance where the business idea is unique however, the way it is positioned it does not appear TO LOOK UNIQUE. 

Collateral And Stakes

Ask your clients what assets they or their family own. Would they like to mortgage those assets and get funding? 

Looking from the Investor’s Eye: Investors want to see promoters’ skin in the game. In case they are reluctant to invest their own money, why would you expect a 3rd party equity investor to take a risk? Investors like to see the confidence of the founder in the idea.

Last is would you as a consultant invest in the business leaving your fee aside

This shall serve as a hypothetical and practical analysis – Would you as investment bankers and consultants pledge your money and advisory fee to make it successful? If the answer is yes, then strive hard to make it successful.

Most founders today start business out of lure of getting high valuations, to get name and fame, to be independent, to showcase the world and relatives that they are doing something different. However, the truth is far from reality. The valuation is merely an illusion, its just a number.

One suggestion to founders: Don’t start burning cash and make it big by thinking equity money is free money. There are no free lunches. Empathize with the money you borrow. Consultants need to provide genuine and straightforward advice to clients than providing them false hope of deal closure.

Also Read: Investment Memorandum Guide for startup

Investment banking is a core element in helping companies, governments, and institutions with raising capital or providing advisory support through financial transactions. Professionals also need to gather a variety of other banking skills such as financial modeling, market analysis and negotiation expertise in order to successfully pursue this career. They also are important for assessing investments opportunities, supporting mergers and acquisitions and advising clients about strategic directions. This article will shed light on some of the vital roles with required skills for investment bankers and expertise necessary to stand out in this dynamic environment.

You can work as an investment banker provided you have all the essential competencies to be able to negotiate, and do financial modeling and market analysis effectively. These skills help professionals assess investment possibilities, guidance during complex financial transactions, and strategic decision-making. In this essay, we look at the core responsibilities of an investment banker and discuss key skills that one has to hold to prosper in this highly competitive sector.

What is Investment Banking All About?

Practically, it is nothing but representing a company, which requires funds or which is looking out for a strategic partner in front of an investor or buyer. This needs to be aptly strategized as both have strikingly opposite requirements. Financial investor is not much concerned about the business model, he is more focused on the return or yield he would generate when he exits. While strategic investors would be able to dive better as they would focus more on synergies with the target company. 

To become an effective investment banker, you need to know everything about the business model you are trying to sell or get investment in. Every meeting with a potential investor is an opportunity which you gained, therefore research well before you land up in a meeting. Sending a quick teaser before the meeting will make investors more learned and the discussions put forth will be more effective than otherwise. The better and crisp the teaser, the higher would be the potential interest of the investors. It is usually a 5-6 pager impactful presentation covering the USP of the company. There are several online tools available in the market to curate beautiful presentations. Therefore, it is not really important for an investment banker, especially the boutique ones to put in lots of effort in designing a teaser or pitchbook. The tools range from Spark Adobe, Canva, Visme, Zoho, and others.

1. Sharing The Pitchbook: 

Post receiving a positive response, you would be required to send a detailed pitchbook running into 40-50 slides which covers the company evolution, management background, technology details, clientele, peer group positioning (focus here on the vision of the founders), and other details. It is usually been experienced that investment banks create teasers and start circulating widely to all the investors, without focusing on the target investors. Additionally, at that point, the pitchbook is under progress. This is a No-No! It is highly important that as a professional you need to be ready with your pitchbook and financial model. Teaser is a by-product of the pitchbook and not vice versa.

2. Shortlist The Investors Wisely 

So as to save the time and effort. It is critical to duly understand the sector in which an investor is keen to invest. There are several forums to get connected with angel investors such as LetsVenture, Chandigarh Angels, Mumbai Angels Network, and Venture Catalyst, among others.

3. Realistic Financial Model: 

A financial model is not merely an Excel working, it is a platform to set future expectations of investors or buyers apart from diluting a stake. You could include some fancy numbers however everything boils down to how well you negotiate and present your case. 

Requisite Skills For Investment Bankers

Based on the practical experience and survey conducted by 50+ investment bankers, it is analyzed that qualification does not hold water in the current economy vis-a-vis experience. Whether you are a CFA, an MBA, a Graduate, or an IITian. All you should focus is an entry into the first door of an investment bank where you could work on live deals. You might have an impressive personality and confidence, however, it is extremely useful to know how to sell apart from understanding different business models. Following are the skills for investment bankers:

1. Good Drafting Skills

It is effective to use powerful words and frame a story while sending a pitchbook. It is of utmost importance to feel the need of the business model by deep diving into the company and getting all the required information for you to sell effectively. At the end of the day you cannot become an industry expert, however, all you need is to connect to an industry expert, who could further facilitate you in providing the right direction.

2. Build a Good Network And Reputation: 

An added advantage of entry into investment banking is it lets you build an extensive valuable network of investors as well as sector experts globally. Therefore, a tool here is to interact and make informal connections with these people. Let them recognize you as an individual and not as a part of the company. You may do this by sending texts on specific occasions or sending some of your social media articles and the most effective way is to call than text or email (as per research, a phone call is 6 times more effective than an email or text). 

3. Work-Life Balance: 

The flip side of working with top investment banks is a majority of them globally are making their employees work 18 hours every day, which in turn takes a toll on their personal lives.  You may opt to work for a boutique investment banks Vs bigger players.

To conclude the entire article, we have tried to share some effective and implementable tools to adopt in real life in order to crack that entry in an investment bank.

Also read a blog – Guide for Investment banker

Modern startup valuations often seem like an unsolvable mystery enshrined in gossip and bubble rumors. Startups looking to raise capital need an understanding of how valuations work. Essentially, a value is the amount of money an investor is willing to spend on your total company — but only after parsing it out from a few key components that have a major impact on investor psychology.

In this guide, we will discuss the main parameters underlying startup valuations and provide some of the pitfalls you should avoid in the course of fundraising. The article provides founders the basis to think strategically in pricing: from focusing on business growth factors towards understanding its valuation- which includes EBITDA multiples, comparable deals, or even asset valuations. Whether you are a first-time founder or getting ready to scale, the future success of your startup hinges on understanding the valuation game.

Understanding The Startup Valuations Game

There is a lot of noise around startup valuations. Let us highlight the greater aspects and what to take into consideration while raising funds. The valuation is the amount an investor is willing to pay for your entire business. The valuation will all come down to three broad aspects mentioned below. The aspects are provided indicative weightage as well to make you understand the psychology of an investor:  

It is being rightly said that investor invests in founders and not business models. Along with that, what actually makes the business valuable is mitigating the risk of the business failing in the future. It is hereby surveyed that 95% of the businesses fail in their first two years of incorporation. Therefore, it is extremely important to be mindful of 7 major mistakes to avoid when growing big and getting trapped in the valuation game:

• Diverting the vision of the business merely for getting investment from big investor
• Focusing on business than valuation number
• Keep personal connections with customers; valuation should not impact the core business
• Developing and streamlining processes and systems
• Don’t shy away from selling the business even when you reach at the top
• Reliance on the team too much; remember it is your dream; for employees, it’s a job
• Diversification in the industry; there are unexplored spaces across the globe to diversify business models

How Do I Value My Startup? 

The major methodology to value the startups

• EBITDA multiple – In the case of profit-generating companies, an investor applies an EBITDA multiple, usually in the range of 7-10x (depending on the size of the business), and multiplies it by the EBITDA. Additionally, there could also be a multiple of sales / Gross Merchandise Value (GMV) for larger fast-growing businesses. 
• Comparable Transaction Multiples– An investor might decide to list down all transactions in the near past and compute the multiples in comparable transactions. It is advisable to carry this method for a large set of comparable companies by grouping a wide range of business model.
• Asset valuation – In the case of capital-intensive business models, investors would like to value the underlying assets. The assets can be a database (for WhatsApp and database collating service business models), and traffic (for knowledge-sharing websites). The scoring shall also be done for the quality of such traffic, active and dormant users, a premium domain name (majorly in the developed countries), a recognizable brand name (social media marketing plays a critical role), and other things that can be leveraged to make higher profits and achieve a faster return on investment for the buyer.

Startups should keep in mind a couple of things while self-evaluating their businesses. Do not boast much of the things which you are not sure about. Analyse and assess in detail the industry size and where would you be positioned post-money in the industry. The best could be achieved, in case you could map the peer group on the scale for competition and USP.