Seed funding is one of the most fundamentally important parts of starting a new business venture. Without seed funding no company would be able to get off the ground. This is the money that’s responsible for paying all of the start-up costs of a new venture.
Companies appeal to investors to give them funding, in return for a stake in the company’s offering. With a good business plan, seed funding is possible. But the major investors, like Sultan Alhokair, have very specific requirements. In order to make an investment more attractive, it’s important to think about these factors.
One of the most important being a viable business strategy. Doing your homework is important before presenting a business idea. That means making a complete plan for how to take the company from point A, the start-up, to point B a successful enterprise. Meaning there needs to be a very clear plan for how funds will be spent, how much funding is needed, and how long there will be for a return on those initial investments.
But there are also other important factors for the company plan. One of them being customer research, to show that there is a definite interest in the product that you have on offer. Don’t rely on friends and family either, this needs to be a real survey of strangers, that provide honest feedback about their interest in the enterprise.
Another important aspect is bootstrapping. This is the method by which a company survives on very few resources, to maximize the potential for profit. Investors don’t want to put in seed funding if the investment is going to be really expensive to run, in the long term. That means the company will take more and more profit to break even, let alone start making real money.
Showing that a new venture can operate at maximum profit potential, while spending as little money as possible, makes for a much more attractive investment. That can be a difficult balance, but is a necessity for long term success. Sticking to the plan is just as important as well, because one thing seed investors do not want to hear is a company needing more money than originally expected to launch the product.