Guidelines to Raise Capital For The E-Commerce Startups
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- Mon, 23-05-2016
When you start a business you usually make no revenue at all while you always need cash to pay your first employee. You may also have to invest in building your product or in marketing in order to get known from your costumers. It means you need capital and it is same when your company is bigger but not profitable because it has not yet reached its critical size.
To generate money in foreign countries most of the companies prefer Latin American Spanish translation services for Product Documentation, which are the Online Certified Language Translation Service Provider. By this Online Certified Language Translation Provider help them to translate their content into different languages and attract more foreign costumers towards your business.
Entrepreneurs invest in the company and get shares. They take the same risks as the founders. It means that if the company fails they lose all their money and they only win if the company succeeds.
What are the different types of venture capital fund?
There are different kinds of VCs depending on which stage they invest. It can be seed stage or early stage, pre-revenue startups which need money to finance product developments or to hire the first employees or to finance the first marketing campaign. There are also VCs that are interested in startups at the later stage when the company has already some revenue but needs to grow in order to reach profitability.
In that case, company has proven business model but needs to scale. To scale, the startups will have to structure its organization which usually implies to hire middle managements and then to invest massively in marketing in order to grow its business as fast as possible. It do cost a lot and it is quite complex.
This is typically where VCs can help entrepreneurs not only with funding but also with their experience, their expertise in scaling up a company at a fast pace.
Which funds are for e-merchants?
An e-commerce startup can contact tech oriented VC funds and especially those who are focused on web. Entrepreneurs should look for VCs not only for the funding but also to get support. Indeed VCs provide feedbacks; they challenge the CEO and strategy of the company. On the diverse questions like for instance positioning, pricing, or user experience.
As they have a very broad view on the e-commerce industry, they usually know what the right matrices to follow are and where the company should go to reach profitability. It can be gross margin, conversion rate, or maybe costumer acquisition costs. Some VC firms can really help the entrepreneurs to grow their business.
That’s entrepreneurs should really take care of choosing the right VC for their startup. Keep in mind that your relationship with your VC will last for a very long time. There must a mutual human fit between you and your VC firm expertise. It’s a relationship, it’s build on trust and respect, you will need to be able to rely on him from day one until you exit.
E-commerce is generally a very competitive market; you would need to get a VC firm able to help you. To move faster and smarter than anyone of your competitors and also to help you to avoid mistakes and deadlocks.
When should you think about raising money from venture capital funds?
Today thank to e-commerce is quite cheap to start an online shop with very few capital and to make money from day one. The e-merchant may than improve progressively its e-shop and then get funding from business angels. As VCs is commonly considered as the best stage to measure the entrepreneur’s true capacity of execution.
You can see there are outstanding people making incredible things with very few money. Bootstrapping its company is a good way for the entrepreneurs to demonstrate its ability to execute and to prove its model. It will be easier for entrepreneurs to convince VCs as he has figures to show, as its company has already some costumers or revenue and as his business is growing
What is the best to contact venture capital fund?
There are three ways to contact a VC.
The simplest one is to use the contact address on the website of the VC firm. Another way to contact VC is using a placement agent. It will provide you two benefits: the first one is that he will help you to make your startup looks more appealing for VC s and the second one is that he will help you to target the most pertinent funds regarding what you do and how mature your company is. And finally there is mutual relationship and it is probably the best way to use, provided you know some people who know targeted VCs. It is most efficient way to proceed.
What are the selection criteria?
The VC investment process is by construction a very selective process. The selection criteria depends on the stage of the company and on the investment strategy of the fund, the VCs usually expect several things. First is that the startup product or services corresponds to a true and real need from a big market. Then that company has already been able to convince costumers.
How to present your company?
During the first pitch, the entrepreneurs need to be able to explain very simply what they do. Their slideshow needs to include something about the team, the product or the service provided by the company, its barrier to entry and competitive advantage. They should provide the information of their product and the services by using Spanish (Latin American) Product Documentation translation services. This Online Certified Language Translation Services Provider is best for you to get your e-commerce business known to masses. They also need to talk about their market.
They should talk about their business model, growth strategy and also about what they will do with the funding. Remember that it is an introduction to your company. It is just here to arose curiosity and interest from VCs. So do not make it too long or complex. A short and simple presentation can so a work very well.