Acquiring the capital needed to get your business off the ground can be challenging. Many small business owners opt to use seed investors to help gather the financial resources needed for a successful launch.
While seed funding still plays a valuable role in the start-up landscape, pre-seed rounds of financing are becoming more common. These rounds take place prior to the actual search for seed money to launch a company, and the money can be used to help you reach many important milestones.
Here are three ways that pre-seed rounds might be beneficial to your fledgling company in the future.
1. Recruiting Key Personnel
Having the right individuals on your team can be critical when it comes to the success of your business launch. One valuable way that your company can use pre-seed rounds of financing is to raise the capital needed to recruit key personnel to your team.
According to GetHired.com, it can cost up to $18,795.24 to recruit and hire a new employee. If your young company doesn't have access to the money needed to attract the right candidate to your team, you can use a pre-seed round of investing to help raise the capital needed for employee recruitment.
2. Constructing a Prototype
If you are planning to sell a product as part of your business activities, then having a prototype of the product available for potential investors to examine can be helpful when trying to raise seed money to launch your business.
Making the choice to capitalize on a pre-seed round of funding to gain access to the money required to create a product prototype could be helpful when it comes to increasing the amount of money you are able to raise in the future.
3. Overcoming Regulatory Hurdles
Companies that operate in industries regulated by government agencies must maintain compliance with strict regulations in order to remain legal. Before you can open your doors for business or attract investors that are willing to fund the launch of your company, you must be in compliance with the regulations that govern your industry.
Using pre-seed funding to help pay for facility upgrades or the development of compliant processes can help you overcome any regulatory hurdles that stand in the way of your company's future success.
Capitalizing on pre-seed fundraising rounds when it comes to building your company can help you access the capital needed to make your business more attractive to future investors.
Share13 May 2016
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