The path to profitability is often long, difficult, and unpredictable. So, many startup companies find themselves not only requiring seed money, but also additional funding along the way.
Although often necessary, fundraising can be a very challenging process for startups, particularly for founders with plenty of technical expertise but limited business and finance experience. One key to success is to put yourselves in the potential investor’s shoes, providing them with a solid pitch deck and business plan that includes the evidence needed for them to reasonably conclude that the investment in your company will yield them a very lucrative return within a sensible timeframe and at a tolerable level of risk.
That evidence starts with showing that your innovative concept solves a meaningful customer problem far better than any existing alternative, as proven by lots of actual customer feedback. You also must show that the problem is a pain point for a sufficient number of target customers, that you know how to reach them effectively with your messaging, and that they will respond positively to that messaging by purchasing your innovative product (and referring it to others!). Further, investors will want to know that your innovative concept is legally protectable, that your innovative solution is manufacturable at relevant scales, and that the resulting product will be profitable. All of this must be wrapped in a reasonable assessment of the corresponding risks.
All that said, think twice before accepting outside investments, particularly if there’s a good probability that you can grow your company organically, i.e., bootstrapping using earned profits. Once you accept investments by others, your company will become beholden to them and their expectations (which are sometimes of jumbo returns in a relatively short period of time). With surprising frequency, that sort of emotional, moral, or sometimes even legal obligation can distort your startup’s business judgment, leading to shortsighted decisions that hurt your company in the long run. In short, don’t take the money if it won’t grow profits sufficiently to provide the expected return to your investors at the speed they anticipate, while setting your company on the path to even longer-term success.