When should you start raising pre-seed funding?
There is no hard and fast rule for when a business should be ready to raise funds or set foot in the market. However, there are a few indicators that you should keep in mind that may help you make the right decisions:
1)You have an MVP (minimum viable product)
The MVP is a basic version of your product that you are ready to raise in the market. This will help you regain your product or service through consumer feedback and market research. The MVP attracts the attention of potential customers and investors that will help you later on with your startup to raise funds.
2)You can demonstrate potential for product-market fit.
The only way to demonstrate your product-market fit is to appeal to your audience. Investors will more likely to finance your startup if you can satisfy your product or services within the specific market.
3)You have a strong founding team
Having a strong founding team with relevant background and experience may help you in attracting investors without much experience. Create an honest analysis concerning your team’s strengths and weaknesses before making your pitch to the investors.
4)You’ve begun onboarding customers
At this stage, your startup may have a small or nonexistent customer base. So, make sure you’re ready to scale your business to meet the customer’s needs and that you are already acquiring potential customers. Active onboarding may also help you in finding capital.
5)You need cash to develop your prototype
Prototyping allows your business to develop the necessary techniques and processes for the long-term production you need for your startup. Many startups seek these prototypes to start the funding process.
6) You’re ready to make critical hires.
Before starting any round of funding, go through your financial projects and balance sheet. Ask your finance team for support and knowledge that can help you determine wheatear you need additional capital or not.