Things To Consider Before Creating A Funding Request Form

When you’re looking to raise money, you can take two common paths. The first is the traditional route, which involves pitching your idea to an investor or angel, hoping they see enough potential in your business to give you money.

The second option, crowdfunding, involves putting together an online funding request form on a crowdfunding site like Kickstarter or Indiegogo, hoping that people will be excited enough about your business idea to give you money in exchange for a product or equity.

For the first case, funding request forms are crucial to securing the funds you need to launch your idea. However, these forms can be confusing and intimidating to fill out. That’s why we at HeyFirm have come up with ten questions that everyone should ask themselves before drafting a funding request form.

Project Description

Keep in mind what would be most appealing to your potential funders, and write for them as much as possible. Don’t assume that everyone reading your funding request form will have all of their basic questions answered by reading it; they may want more details or a brief history of how you got to where you are now.

What do you plan on doing with your funding? Is there anything that cannot do without it?

Can you use an alternate funding source (e.g., grants, loans) if funding from individuals is unavailable?

Who is your target audience, and why is it likely that people within it will support your project?

How much money do you need to complete these goals (consider setting too low a target risks being rejected)?

How exactly does fundraising benefit your work (i.e., what does having additional money allow you to do)?

Where else could you get money from—what other sources are available?

Key Personnel

One question most often left off a funding request form is key personnel. Who are they? What are their pasts like? How will they fit into your business? If you’re leaving out a question as important as that, it can be easy for a funder to dismiss your entire proposal. While you might not want to go into too much detail with strangers, at least make sure your readers can see why these people are necessary for your company and its future.

Financial Information

How much funding are you requesting? How much have you raised so far, and how much will your raise bring your total fundraising? What is your rate of cash burn per month? Why do you need $X dollars more than what you’ve already raised? Who will be working on the project, and what are their qualifications/experience? What does success look like for you and your investors?

Competition

Funders look for reasons not to fund an idea, but if you can preempt their concerns before they do and address them thoroughly, it’s one way to help secure funding.

• What are you doing differently than others?
• Who else is doing similar work?
• Who funds what you’re proposing?
• How much will it cost and how will you spend it?

The more thought-out you are, the more likely funder is to respond positively to your idea.

Business Model

It’s important to share the big picture with a potential funder. For example,

• How will you make money?
• What is your market size?
• Who are your competitors?
• Will you own your platform, or will you outsource some aspect of it (e.g., AWS)?
• How will you keep customers’ data secure?
• What are your team’s credentials, and what have they done before?
• How many people will be on that team, and who are they?
• When can we launch a minimum viable product (MVP)?
• Why should I fund your project now rather than later?

Management Team & Advisory Board (optional)

You will want to list out members of your management team (if you have one) and/or any advisors that you’ve brought on board so far. Here, include a brief bio of each individual and links to their LinkedIn profiles or personal websites.

Also, list how much each person has committed and how long they’ve associated with your company.

Marketing Strategy

Before talking about your business idea, prepare a one- or two-page marketing strategy. Discussing your marketing strategy shows that you’ve thought through why your product is valuable, who will use it, how they’ll use it, and when to buy it.

It also lets investors know that you know there’s a demand for what you want to sell, which means you have confidence in your business idea.

What is the capital raise for? What are your future funding needs?

Why do you need funding? Is it for working capital, expansion, or to develop a new product? While we’re not putting more emphasis on what you say here, we are encouraging you to be as descriptive as possible. In some cases, potential investors will ask more specific questions based on your answer.

Intellectual Property (optional)

Make sure you’re asking yourself these questions, so you can protect your idea from being stolen or copied. Intellectual property questions might be something like Have I applied for a patent? And/or Have I copyrighted my work? These are great questions because they allow you to think about how others will view your idea, rather than just how YOU view it. It forces perspective and may save you some headache later on down the road.

Investment Objectives & IRR (optional).

If you seek investments, it’s a good idea to include these details upfront. You should be clear about your funding goals and preferred valuation (e.g., 10% of the company with all preferred stock).

If you’re not seeking funding yet, that’s OK too! It doesn’t hurt to put these details out there now so that investors will know what your interests are when opportunities arise.

For more information on different types of share classes, check out my post titled The Importance of Share Classes in Startups.

Also, consider including any liquidation preferences if applicable. For example, if I am investing into your startup today for $1M at a $4M pre-money valuation and have 5x rights after liquidity events, I would expect to earn 5x my initial investment back before any proceeds are distributed above me.

Free Funding Request Form Template

We’ve created a free funding request form template ideal for both startups and other communities. You could also sign up with our online form builder and create funding request forms within minutes. Click here to get started for free.