Contrary to popular notion, the most dangerous time for a business is not the initial phase but rather the scale-up for growth. When a company is in the start-up stage, there is little to lose, and mistakes can be easily fixed. Minimal investment and a small team can help a business go a long way. But once you decide to accelerate and grow your company, things can get complicated.
The entrepreneurial journey is not as easy as it seems. You need to have an idea, fundraising, and business planning skills to launch your startup before you can start building your SaaS products. This is where the AI venture studio for SaaS comes into play. They evaluate the problem, proposed solution, and growth opportunities against the business idea and model.
It would be best if you had significant capital and vast amounts of cash. Whether they are start-ups or smaller companies, a majority of entrepreneurial ventures don’t have a plan on hand when it comes to scaling up. You will need financing, but it is crucial to utilize these to your best advantage. Banks, financial providers, and venture capitalists like early stage VC funds can help provide you with the capital for your business’s needs.
Take advantage of multiple sources of financing
A majority of entrepreneurs who are suddenly thrown into a growth trajectory think mostly about sharing profits with venture capitalists or angels. But once you have embarked on scaling up, it is faster and more practical to pool your financing from a combination of sources such as equity investors, public funds, and banks. You might even want to offer your employees stock options to enhance your cash funds. Venture capitalists such as early stage VC funds are a company you can turn to scale your business.
Speak the language of different capital investors
When you discuss with bankers and other financial providers, you must learn how to speak their language. You don’t merely say that your business is scaling up fast, and there are tons of opportunities for investing. When it comes to banks, they do not care about abstract concepts. They are interested in how they will be repaid for their principal plus interest on time.
They also want to check other assets that serve as potential collaterals. On the other hand, public funders will look into opportunities that create jobs, particularly during periods of rising unemployment. When it comes to research institutes, they care about how problems will be resolved to get funding themselves. Advocacy groups and philanthropies will disburse funds if they find that your business can help in the progress of their area of interest. When you interact with these potential investors for your enterprises’ growth, it is crucial to present to them the advantages of investing in your business. You must answer the question: what’s in it for them?
Have a financial strategy for your scale-up
Getting financing is one of your most valuable strategies. But it would be best if you had a plan on how your financing strategy can help with your growth. The needs of your scale-up, such as hiring additional employees and building infrastructure, requires capital. You need to find out the kind of financing necessary to support your business’s growth and where you can cut costs.
Avoid making variable costs into fixed costs early in the game. For example, there are plenty of eCommerce ventures who try to establish their fulfilment centres rather than outsource to third party vendors. Think twice about investing in assets that may not be necessary at this stage of your growth.
Angel investors have surplus cash and are keenly interested in investing in start-ups. They also work with networks and groups to check proposals before investing. Angel investors also offer mentoring and advice with the capital they provide. Angel investors are notable for kickstarting huge companies such as Google and Alibaba. You might want to consider Angels, especially in the early stages of growth. They are ready to take more risks in investment in exchange for higher returns.
It is inevitable for a successful business to expand and grow. However, you need to sustain your scale-up and balance your resources. Financing is an excellent option for you to get a fresh infusion of capital to fund any investments. Using financing smartly can help leverage your revenue and growth.