Are you ready to raise money for your startup?
Raising big money may look easy in the media, but there can be a lot more that goes into successful campaigns that you see in the headlines. If you want to hit your funding goals, do it on time, and avoid the pain of missing your targets, these are the things you must do first.
There are billions of dollars up for grabs, make sure you get your share of it.
Network, Network, Network
The number one factor in being able to raise money is going to be your network. Who do you know? Who knows you? Who do you know that can introduce you to those with the capital?
As with any other types of big successes, big overnight fundraising wins are typically the result of months and years of networking and relationship building. If you’re just getting started in this arena, look for ways to hack a bigger network faster.
Get to industry, startup and investment events. Find connectors and fundraising consultants who already have the network you need to reach.
Create A Great Pitch Deck
Even if you never use it (and you will), creating your pitch deck will help you think about the most important things in your business. It can really help bring clarity and connect your business for those looking from the outside.
It really doesn’t matter how high your IQ is, where you went to school and how fantastic and needed your product and service is if it can’t be laid out well in a pitch deck.
You don’t have to reinvent the wheel or get bogged down here. Check out this fundraising training for a free pitch deck template you can use.
Advisors & Second Opinions
Listening to your gut instincts can be valuable. Yet, especially as a technical founder, you need to get second opinions from that outside of your business.
Even the best entrepreneurs are too close to their businesses to be objective and view them from the customer point of view. Success is always about the customer. That includes those you are selling the product to, and investors you’ll be pitching.
Experienced fundraising advisors who have an eagle-eye view of the funding marketplace can provide hyper valuable insight into what is working and what isn’t.
Understand Terms & Their Impact
Once you take money from investors, you are really committing to permanently going into fundraising mode and honing in on an exit.
The terms you strike with your investors and who you let on your cap table can make a lot of difference in the control you have in your business, how easy it will be to raise future rounds of capital, and the mergers and acquisitions process.
Invest in learning about term sheets, cap tables, and their influence in advance. A great M&A advisor can help with this, and plotting the best strategy.
Create A Plan
Successful and oversubscribed fundraising rounds don’t just happen by accident or luck. In addition to your business plan and marketing plan, you should have a thought out and written fundraising strategy and plan.
There is a lot that goes into these campaigns underneath and well in advance. There are a lot of working parts. It takes being intentional, strategic, and very organized to time and execute on everything well.
Without a good plan, fundraising can be a very long, drown out and soul-crushing experience.
Strong Team
In early fundraising rounds, whether you get the money or not will greatly rely on the team. It is going to be the number one decision making factor for investors.
Do you have experience in all the areas you need? Is your founding team liked, trusted, and capable? Are they the best in the industry?
If you can encapsulate all of this along with a few key advisors then you may do just fine as a solo founder.
If not, round out your team with the strongest players you can before you create your deck and hit the fundraising circuit.
Be Prepared For Rejection
You might land a check at your first pitch attempt. Odds are that it will take many pitches and investor meetings to fill your funding round. Even more so from your pre-seed to Series A rounds.
If you can’t handle 50 or 300 investor rejections to get the money you are asking for, then fundraising may not be for you.
Entrepreneurship may not be for you. Hopefully, it won’t be that many. Though in order to make it, you have to actively embrace rejection.
Frame it in your mind however you need to, but be prepared.
Get The Word Out
Secrecy is your number one enemy when trying to raise money. You need visibility. You want the buzz and sharing and people talking about you. Remove any roadblocks to this.
Tell as many people as you can. Encourage them to share it. Consider a PR campaign. Be prepared to spend some serious money marketing your fundraising campaign.
Create as much buzz as possible. Budget to hire the help you need to do enough of this. Ask For Enough Money
Don’t sabotage your efforts and startup by failing to ask for enough money.
For a start, experienced investors who really have the capital to invest know what it is really going to cost to execute and even just get to the next milestone.
It’s probably more than you think. Secondly, the worst possible thing that you can experience as a startup founder is quickly running out of money before meeting your milestones and then failing your investors and having to fold the business.
About the Author: Alejandro Cremades is a serial entrepreneur and the author of The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley & Sons, the book was named one of the best books for entrepreneurs. The book offers a step-by-step guide to today‘s way of raising money for entrepreneurs. Most recently, Alejandro built and exited CoFoundersLab which is one of the largest communities of founders online.