According to the Official Site of Govt of India, India has surpassed the total number of more than 117 Lakhs registered startups in Year 2023. And this is the 3rd highest in the world. As soon as the impact of the Covid era has subsided, The Indian startup ecosystem is emerging every coming year and this is generating interest from all over the world as an opportunity for equity investment. 
1. Why raise money -
The decision of raising funds should start with an important question that, why do we need funds and where are these funds going to be spent? The answers of this question should be very analytical and strategically driven.
For a dedicated and passionate founder a company or startup is meant to grow fast. And high growth companies require capital to spend to achieve high profitability. Of Course there are few big companies which have grown bootstrapped, which means they did not raise any funds. But if we will find math behind this then the probability of this happening is very low.
According to CNBC.com, In 2022 Around 47% startups failed due to insufficient funds for running the operations. Half of the time the money required to make a startup profitable is way more than the founder’s availability and friends or family. After a certain point a startup requires a good amount of capital for sustaining the growth curve.
Available Capital not only helps in growing a company rapidly but also gives competitive advantages like hiring cream talent, marketing and sales. The process of raising finances is intimidating in the early stage startups which don’t have good industry connections. But with the new age venture capitalists this process has become simpler.
2. When Raise Money -
As a founder reaching a critical point in your business journey, the decision to pursue venture capital (VC) fundraising is a pivotal one. Raising a VC fund is subjective to multiple analytical and emotional factors. For some founders, it is sufficient to have good storytelling skills and market reputation to raise funds. But for most of the cases it requires a good idea, products and in the early stage: at least some amount of customer traction. This marks a significant step towards scaling up your operations and taking your venture to new heights.
Now that we know when to raise funds, it is equally important to understand 'when not to raise money.' If not more important than knowing 'when to raise money,' then it is certainly not less important as well." So —
3. When Not to Raise Money -
Raising funds should not be viewed as the end goal but rather as the starting point of a much larger journey. Securing investment gets you to the starting line of the race; it’s the beginning, not the finish. Success is measured by what follows the funding: how effectively you execute your vision, scale your operations, and achieve sustainable growth.
In fact, According to Harvard Business School studies show that nearly 75% of venture-backed startups fail, underscoring that raising money is no guarantee of success. Hence, the readiness to scale—evidenced by market validation, operational efficiency, and a clear growth strategy—becomes a pivotal factor.
Just like taking admission in IIT won't make a student an IIT graduate, but completing the 4 years of the degree does.
Therefore, instead of celebrating with "congratulations," we should offer "all the best" to founders embarking on this challenging path. It's crucial to ensure your business is ready to leverage the funds effectively and that raising money aligns with your long-term strategy, not just a short-term milestone.
4. Clear Vision and Mission
In your quest for funding, pinpoint investors who align with your industry and vision. A focused approach enhances the likelihood of connecting with those who share your passion for success. Craft a pitch that's not just compelling but also concise. Clearly express your value proposition, market differentiators, and how the funds will drive growth. Practice your pitch for confidence and coherence, ensuring you leave a lasting impression.
5. Assessing Readiness
Before diving into the world of VC fundraising, it's crucial to assess the financial health of your startup. Investors seek viable, sustainable businesses, so ensure your finances are in order. Founders should be prepared with a detailed and logical execution plan that showcases future growth.
For example— if a startup claims it plans to expand globally, it should provide evidence that there is international interest and acceptance of its product or service and also of their ability to capture that interest. This could include metrics from pilot programs in different countries or testimonials from global customers. Demonstrating such preparedness not only builds investor confidence but also substantiates the startup's growth potential.
ESSENTIALLY, LOGICALLY DEMONSTRATE YOUR ABILITY TO EXECUTE YOUR PLANS.
6. Leadership and Talent Acquisition Strategy
Investors often bet on the team as much as the product. Showcase the skills and experience of your leadership, emphasizing how your team is well-equipped to navigate challenges. Detail of how you plan to expand your team with the infusion of capital. This demonstrates your foresight in building a robust workforce to execute your ambitious plans.
7. Connect with right suitable investors -
Delve into research to pinpoint venture capitalists in sync with your industry and vision. A focused approach raises the odds of connecting with investors who share your passion for success. Subsequently, create a compelling and concise pitch, articulating your value proposition, market differentiators, and how funding will drive growth. Practice your pitch to exude confidence and coherence, making a lasting impact on potential investors.
8. What’s in it for the Investor
Investors seek opportunities for significant capital growth. They invest in a company's future potential, and for this, sufficient room for growth must be available.
For example, a founder might value their company at 100 Cr, which is ten times the current revenue. However, it's extremely difficult for the same company to achieve a valuation of 1000 Cr in the next round even if its revenue has grown 10 fold. Hence, founders should avoid overvaluing the company, anticipating all future growth in the current valuation round.
Valuations don't typically increase proportionately after the growth stage, ensuring there's room for substantial returns, making the investment attractive to investors
9. Honesty is the key to unlock the investor’s trust -
Anticipate and address potential risks and challenges your startup may encounter. Showcasing foresight and having contingency plans in place builds investor confidence. Additionally, emphasize the measures ensuring responsible fund usage. Transparency and financial discipline are vital for establishing trust with potential investors.
By strategically addressing these checkpoints, you not only enhance your chances of securing investment but also lay a solid foundation for the future success and growth of your startup.