Attention startups! Here’s presenting your guide to Funding 101 | Business Insider India

Attention startups! Here’s presenting your guide to Funding 101



After Prime Minister Narendra Modi's Startup India initiative which introduced policies in favour of startups, turning that great idea into a startup has become so much easier.

But, as a founder there will be more obstacles in your course- the biggest being the issue of funding!

To make your job a little bit easier, Business Insider teamed up with Rahul Anand, CEO and co-founder of Hopscotch.in, a discovery-based e-commerce destination for moms, offering a wide range of curated children's merchandise founded in October, 2012.

Anand has about 15 years of experience in both India and the United States assuming roles in verticals such as Corporate Restructuring, Corporate Finance, Business Development, Product Recommendations and Merchandising Insight among others- making us believe he was just the right candidate to give some trips every startup is dying to know!

Thus, we got him to tell us the five tips every startup who is seeking funding should follow, five common mistakes that they should avoid and finally, the three ways to utilize their funds once the startups are successful in getting funding.




Five tips to help start-ups seek funding:

1. Find money where it is most easily available - take what you get and start quickly. Time is money and the faster you get started, the quicker you get to begin innovating

2. There is no such thing as a great deal - look for fair terms, offer investors transparency and respect. Money is a means to an end and you only create real value by building a great company

3. Make sure you get the right type of investors to back you - raise money from people who will let you build the business with autonomy and who believe in you

4. Beware of raising capital too early from institutional funds - The first year of a startup is about gaining validation, and not about chasing vanity metrics

5. Build a real business with investors that get it - Ensure the fund you work with has a strong point of view and themes about investment scenarios that align with your deep assumptions




Five common mistakes that every startup should avoid:

1. Avoid building "extravagant" solutions - Come up with a basic minimum viable product that will help you gain validation before you try to build something fancy.

2. Hire for outcomes, not based on resumes - the initial team is the most important. This team needs the technical skills, grit and speed to get your startup to product market fit very fast. Execution is the only thing that matters. Critical thinkers are more important than experienced executives. Watch out for people who ask "what's my title going to be."

3. Raising too little money - raise as much money as you can, but from the right investors

4. Doing too much - entrepreneurs often fail because of indigestion i.e. they put more in their mouth than they can chew. Startups die because you do too much and drown in opportunity. Do one thing, and do it really well

5. Pay yourself a reasonable salary - Your job is not to scrounge for cash, but focus wholeheartedly on work. Ensure you can cover expenses and take vacations when needed. This is a marathon, not a hundred-meter race, and you desperately will need the rest and resuscitation to win in the long run.



Three best ways to utilize your funds
1. People and hiring - hire people who are passionate and want to build something great. Pay them well so they too can focus

2. Experiments - test and learn with everything you do. Few startups get it right the first time. Make sure you don't blow up all your money before gaining strong validation

3. Move fast - Invest in anything that can help you rapidly test, and validate your hypothesis quickly

Image credit: Indiatimes

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