The fall of online retail business Shooii into administration this week is a further sobering reminder to entrepreneurs of the importance of cashflow.
Despite only operating for three months, Shooii ground to a halt through a lack of cash, with the failure to land a “cornerstone investor” cited as a key reason for its collapse.
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When starting a web-based business, you should be able to keep costs to a minimum – overheads are generally low and it’s possible to scale quickly without a huge investment in equipment, premises and staff.
However, if you aren’t yet making sales or you have lofty ambitions for your business, you’ll probably need an investor who will share your vision and back your venture with enough cash to keep it going.
Happily, increasing numbers of Australian start-ups are getting the seed funding they need through the explosion in accelerators and incubators, even if some have had to venture overseas in order to get backed.
But convincing an investor to part with their money based on little more than your business plan and experience remains a significant challenge.
To help maximise your chances, Andrew Birt, co-founder of Melbourne-based tech accelerator AngelCube, has put together the 12 essential steps for impressing tech-minded investors.
To see each of Birt’s tips, click on the tabs below:
1. A well-rounded team
Building a start-up is a long and lonely journey and the data shows start-ups with two to three co-founders are far more likely to succeed than single founder start-ups. Investors realise this and are much less likely to back ideas run by a single founder.
The Startup Genome Report, an in-depth analysis of 650 start-ups, found that well-rounded teams with a blend of business and tech co-founders stand a far greater chance of succeeding.
Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9 times more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.
The lesson? Before building anything, build your team and make sure there’s a blend of tech, marketing and sales skills within your team.