- Vinay Nair
Fundraising is like a Marketing Campaign
Updated: Aug 3, 2020
Not everyone can just go out and start a business.
In the beginning itself, a founder requires sufficient funds for covering any initial expenses and transform their business idea into a viable product or service. And we know for a fact that seed capital is one of the resources that is distributed unequally among entrepreneurs. With access to limited capital they are often forced to look for Early Stage investments from external sources.
One of the most popular methods for startups to generate these funds is via fundraising with angel investors or venture capital & private equity firms. Even though there are a lot of other options available out there, obtaining such working capital is not an easy job.
Our society is now moving towards empowering every entrepreneur to pursue their dream through encouragement and freedom of thought. Many young entrepreneurs are venturing out to start their own business and most of them have been very successful with it. There are certain prerequisites to obtain funds from outside sources that any business must follow.
Fundraising can be considered very similar to developing a marketing campaign.
When you set out to look for funds, you are literally hoping to sell your offering to a prospective investor, and if the proposition is convincing than the investor is expected to make an investment above the fair market value. Hence, budding entrepreneurs need to understand that fundraising is basically dependent on how well they can sell their concept
Fundraising & Marketing
Just like conducting a market research of your sector before launch, an entrepreneur needs to carry out an extensive research and collect the right information on types of investors before even approaching them or sending cold emails. After identifying the right investor group, a well articulated pitch has to be prepared for presenting, with relevant information on your business and revenue model. The pitch should be precise and intriguing enough as to keep the investor engaged and delved into your unit economics.
As we know a strong marketing campaign leads to better operating revenue for the organisation. Similarly, fundraising is also a sales oriented activity and the quality or result driven from the exercise depends on the moat you build around the startup.
Branding is an important aspect for both fundraising and marketing.
A good brand narrative will latch on to the minds of consumers and investors alike. The founder needs to be able to articulate their vision in an effective manner, defining every element of the startup mission in detail. The startup narrative should not be generic or monotonous. The entrepreneur needs to be well aware of the market opportunity and conditions to be able to make a disruptive breakthrough.
Apart from external research fundraising requires an entrepreneur to conduct internal research pertaining to the capability of the workforce, production capacity, business strategies, revenue models used, etc.
The outcome from both fundraising & marketing campaigns are distinct.
The main objective of a fundraising campaign is to bring in money at the right value and from the right investors, while the objective of a marketing campaign is to create brand awareness and in turn drive sales. Still sounds familiar? It's also fair to say that in the long run the fundraising goals of an organisation are mostly aligned with the marketing goals achieved over time.
Fundraising versus Marketing
Fundraising is a subjective matter and each entrepreneur has a different set of skills under their belt. Some are good at marketing, some are good at the financial aspects and others might be technology driven. However, when it comes to fundraising every entrepreneur has to hone their marketing skills irrespective of the fact that they are good at it or not.
Investors always prefer individuals who are motivated and have the ability to get their product out to the maximum number of people as preferred investment options. Even VC funds look at the passion and drive of the founder before making any commitments. Every entrepreneur worth their salt will possess the passion for the business, which they should articulate through their pitch. Many times, even an average business can grow into a successful venture with a capital infusion at the right stage.
Marketing fosters relationships for the business. The investor’s goals and objectives are achieved through strong marketing campaigns which yield results, ultimately leading to the goal for which funds were generated. At the initial stage both these proceedings work in collaboration and intertwined to your organisational goals and achievements.
Hence, every entrepreneur needs to don the business development cap!!!