Imagine you have a brilliant idea, like building the next super-cool video game or starting a robot dog walking service. To make these big dreams come true, you usually need money to buy supplies and hire help. In the business world, asking for this money is called a Funding Request And Exit Strategy​. The funding request is simply you asking investors for cash to start your project. The exit strategy is your plan to pay them back later, usually with extra money as a reward. Think of this guide as a treasure map that helps you get the supplies you need while showing investors exactly how everyone wins at the end of the adventure.

What Are Funding Request And Exit Strategy?

Let's begin with the basics. Imagine you'd like to set up the lemonade shop, however, you don't have any sugar, any lemons and you don't have cups. Your parents offer you $20 for items.

  • The Request for Funding: This is you soliciting the money of $20. Explain exactly why you'll need to use it to be used for (lemons cups, lemons) and the reason why your lemonade is the top of the line.
  • The Exit Strategy You are telling your parents the way they can receive their money back. Perhaps you tell them, "When I sell 50 cups, I will pay you back your $20 plus buy you a cookie."

In the world of business for grown-ups the Financial Request and Exit strategy operates in the same manner however, with larger amounts. This is the section of your plan of business that informs the investors that:

  1. What amount of money do you'll need.
  2. What can you use it for.
  3. What will everyone earn profits in the at the end.

I've witnessed many startup fall because they couldn't get a the funding and exit strategies explained in a clear manner. Do not worry, I'm here to assist you in ensuring that you are a master at strategically planning exit strategies for startup companies.

Why Is Funding Request and Exit Strategy Important?

Perhaps you are thinking "Why do I need to plan the end of my business before I even start?" This is an excellent to ask!

The reason investors are interested in their exit strategy is as simple as they rent you money. They're interested in knowing what happens when they will know when the "rental" is over and they'll be able to cash the. If you do not know what you are doing to cash out, they may think they'll hold their cash for the rest of their lives.

This is the reason this couple can be a formidable couple:

  • It demonstrates that you are smart: It proves you have considered the future.
  • It lowers the risk of loss: Investors feel safer with the assurance of an longer-term plan for exit.
  • It sets goals: It helps you set goals that are large such as selling your business to a major tech company.

If you don't have the solid exit strategy for your startup segment, your company plan will be like an unfinished treasure map where no "X" marks the spot.

Read also: What Are Global Trends in Business: Shifts Shaping the

Top 30 Funding Request And Exit Strategy Tips

Funding Request And Exit Strategy​

I told you that I'd reveal my top secrets. Below are my top 30 funding request and exit strategy strategies to help ensure your strategy is successful.

Planning Your Ask (Funding Request)

  1. Be Particular: Don't say "I need some money." Speak as if "I need $50,000."
  2. Mathematically demonstrate: Tell us precisely how you came up with the number.
  3. Check your costs: Is it for marketing? Are you building a site? Are you hiring the team?
  4. Imagine your future. Are you going to need more cash in the next the next two years? funding rounds and an exit strategies are inextricably linked.
  5. Do not be too stingy: Only ask for the things you really will require in order to take the next level.
  6. Demand for funds MVP stage startups: If you are only beginning, you should focus on creating an initial prototype (a prototype version of your idea).
  7. Provide a schedule: When will you use this money?
  8. Make sure you match the funds to the milestones: "With this $10k, I will get 1,000 users."
  9. Find out your worth: How much is the idea you're working on worth now?
  10. Be realistic. Don't claim that you'll be billionaire within one month.

Planning Your Goodbye (Exit Strategy)

  1. Learn about the possibilities: Know the difference between an IPO or an acquisition.
  2. Acquisition It is the time when larger companies buy your company. This is by far the most popular technology startup exit plan objective.
  3. Initial Public Offering (Initial public offering): This is an event when your company is placed on the market for stocks.
  4. Mergers: Two companies become one giant company.
  5. Family Succession Giving the business over to your children (not good for non-investors).
  6. Management Buyout Your managers purchase your company.
  7. Why investors pay attention to strategies for exit: Inform them that they'll be able to earn a Return in Investment (ROI).
  8. Exit strategy timetable for startup companies: Usually, investors are looking to leave in between 3 and 7 years.
  9. Be Flexible: Plans change, and that's fine.
  10. Check out your rivals: Who bought companies similar to yours last year?

Writing the Content

  1. Make bold texts: Highlight key numbers.
  2. Simple: Funding Request and Exit Strategy should be simple to understand.
  3. Honest: If there's a risk be honest and declare them.
  4. Make use of visuals Charts and graphs can be your best friends.
  5. Exit of the founder vs. investor exit There are times when you quit however, the investors are there. Let us know the difference.
  6. The best way to justify your the need for funding: Use data and study.
  7. Exit strategy's importance to the investors Include this information in your introduction.
  8. Check it out: Ask a friend to go through it.
  9. Make it up-to-date: As your business expands, your approach may evolve.
  10. Trust in this: If you don't trust the plans, nobody else will.

How To Write a Funding Request Example Business Plan

Now, let's get our hands dirty! This article will teach you the steps to create this section step-by-step. Consider that you are creating an example of a Funding Request And Exit Strategy​ template for a firm which makes "Flying Sneakers."

Step 1: The Funding Request

Here is the time to request money. It is important to have confidence!

Examples of text "I I am seeking $100,000 for funding in order to create Flying Sneakers Inc. This will be used to create the initial 500 pairs of sneakers and build a fun web site. "

Keywords to be used:

  • Request for funding to MVP stage beginning
  • We require capital to fund
  • Funds will be distributed to 

Step 2: Use of Funds

It is important to explain where each dollar is going. The investors hate the mystery of expenses.

  • Manufacturing: $50,000
  • Marketing: $30,000
  • Hiring Staff: $20,000

This is a clear answer to the question of how to justify a requests for funds issues.

Step 3: Strategic Exit Planning for Startups

The grand finale. It is important to explain that the story will end happily.

Exemple Text: "Our goal is to expand Flying Sneakers Inc. over the next five years. Our main exit strategy for young stages of startups similar to ours would be an acquisition strategy by the major shoe brands such as Nike and Adidas. This could yield a huge profit to our shareholders. "

See? It's simple, straightforward and thrilling!

Read also: Risks Involved In Funding And Failed Exits.

The Best Exit Strategies for Startups

I am asked this question frequently: " What is the best exit strategy for startups?" The fact is that it's dependent on your goals! We'll look at the most important options so that you are able to decide.

1. Acquisition (Selling Your Company)

This happens when a huge fish consumes the small one, and the small fish is paid lots of dollars! To help with expansion of startups and exit strategy This is the preferred option.

  • Example: Instagram was a smaller company prior to when Facebook acquired it.
  • What's great about it: You get your funds quickly and proceed to your next exciting idea.

2. IPO (Going Public)

It's the ultimate exit. The company will be listed on a market (like that of the New York Stock Exchange).

  • The reason it's great: You could become popular and wealthy.
  • The reason it's difficult: It requires a lot of duration and requires a large amount of money to setup.

3. Merger

It's like getting married. The company you work for and the other are able to come together in order to strengthen each other. This is an excellent technology startup exit planning decision if you've got several rivals.

When Should a Startup Plan an Exit?

Perhaps you think "I'll worry about this later." However, honestly speaking, when should a startup consider an exit? It's: Day One. Imagine it as making a house. The bricks wouldn't be laid without figuring out what your house should appear like, would you?

  • The Early stage: Concentrate on the exit strategy of the early stages of startups such as selling to competitors.
  • The Growth Phase: Examine financing rounds and strategies for exit changes. Perhaps the possibility of an IPO may be possible in the near future!

A plan can help to make the right decisions now. If you'd like to be purchased by Google and you want to be a part of the Google family, then you must create technologies that Google enjoys. That's the strategic plan for exiting entrepreneurs that are in motion!

Expert Quotes and Opinions

I wanted to ensure you are getting the right information, so I have gathered an array of wisdom and experience from business professionals.

"Investors do not just invest into a commodity; they are investing in a journey. The Funding Request And Exit Strategy​ is the guide for that journey. If you're not sure of which direction you're headed I'm not going to get into the vehicle. " -- Sarah T., Angel Investor

"Many founders don't realize the fact that exit of the founder and exit for investors may be distinct. It is possible to want to operate your business for the rest of your life, however the investors you have hired must take their money out. There must be a way to equilibrium. " Mike R., Startup Mentor

They agree that clarity is essential. It is important to demonstrate that you know what investors want to know about your exit strategy.

Common Mistakes to Avoid

I've seen a lot of people make mistakes with this. This is the best way you should not to do when you write your Funding Request And Exit Strategy​.

  1. Being vague: Don't say "We will exit eventually." Set an plan for exit timetables for start-ups that include "We aim to exit in 5-7 years."
  2. Doing nothing to help the market: Do not say that you'll sell to a business with no funds.
  3. Asking for too much: If you ask $10 million for the lemonade booth and no one would be able to take it seriously.
  4. The Team is forgotten: Investors invest in your success. It is important to state the reason why you are the right person who can pull off this fund request as well as an exit strategy example.

Real-World Success Stories

Let's take a look at real examples of the ways in which the growth of startups and exit strategy performs.

The WhatsApp Story

WhatsApp was in need of funds to continue running their servers. They submitted an solicitation for funds for venture capitalists. The plan? increase the number of users till they were large enough to be ignored.

  • The End: Facebook bought them at $19 billion! This is an enormous success for all those who is.

The Minecraft Story

Markus Persson, the creator of Minecraft, Markus Persson, did not want to be the CEO of such a large company for the duration of time.

  • The exit: He sold his business for $2.5 billion to Microsoft in exchange for $2.5 billion.
  • The lesson: Sometimes the best way to exit for investors is finding an appropriate place to put your work.

Read also: How To Find Venture Capital Funding.

FAQs: Funding Request And Exit Strategy​

I'm sure you have several doubts. These are the top queries I receive regarding the Funding Request and Exit strategy.

Q1: Can I change my exit strategy later?

A: Yes, absolutely! The financing request and Exit strategy template is merely a strategy. If your company grows the plan you have to follow as well.

Q2: What if I don't want to sell my company?

The answer is: This is fine However, you'll must repay your investors. It is possible to consider the "dividend" strategy, where you make them pay a percentage of the profits you earn each year rather than a large cash flow or liquidity event.

Q3: How long should my funding request section be?

A: Keep it short and short. Two pages should be enough to fill out the financing request sample of a business section.

Q4: Do I need an exit strategy if I borrow money from a bank?

A Different banks. They require monthly payments (loan payment). A exit method typically is for investors that take part of the ownership (equity) within your business.

Q5: What is the most realistic exit for a small startup?

A for the vast majority of smaller firms, acquisition (being purchased by a larger company) will be the most probable and the most effective exit strategy for start-ups.

Conclusion: Funding Request And Exit Strategy​

Wow! We've did a great job in the last hour! Hope you have the confidence to become an expert on Funding Request And Exit Strategy​. Keep in mind that drafting an effective business plan isn't just work-related, it's the beginning step towards becoming the person you want to be. In writing a clear and concise description of your financial request as well as your the exit plan you have outlined it is showing the world you're serious, skilled and ready to take on the world.

If you're planning to submit the submission of a solicitation for funding to an MVP stage startups or contemplating an longer-term exit plan it is important to be transparent, honest and relaxed. Investors too are human! They're looking to be in the middle of something exciting. Be sure that your funding request and exit Strategy has a narrative that people want to go back to. Therefore, get out there and write your plan and then get the funding! I am confident in your abilities. Best of luck!