From seed to Series A and onwards, fundraising is a huge part of running a startup. We’re lucky enough to have helped hundreds of companies through the early stages of fundraising right to the end.
Whether it’s finding VC’s and investors or building a good relationship with someone you’ve already met, there are lots of options to consider, and lots of challenges to face. Funding can make or break a startup, so it’s vital to start with the right knowledge.
We love to share the knowledge of the network of founders we have, so we asked some of our more experienced founders “What key learning from your experience would you pass on to someone who is actively fundraising?”
Here’s what they came back with.
Build momentum beforehand.
Sohrab Jahanbani (@sjahanbani), founder and CEO of Bidvine, explains, in the run up to fundraising “have a plan that reflects your metrics, give yourself plenty of time, listen to feedback, make sure you meet with enough people and build momentum for the round before you get into detailed valuation discussions.”
It can be easy to focus on what your product could be, rather than presenting exactly where your business is now.
Having a clear idea of where your product is and making it clear where you’re going is vital when you present your plan to potential investors.
Nurture your Network
“Start developing a network as early as you can; investors invest in people – the idea is important but ultimately they need to have faith and conviction in you the entrepreneur.
Getting warm introductions from people investors trust or better still having a direct connection to the VC/angel shortcuts a lot of the process as they need to really believe in your ability and know that when things don’t go to plan (which is often the case) you will be smart enough to figure out the way forward.
Actively work to nurture your network, even if you aren’t fundraising, so that you can seek advice from angels/VCs so you aren’t ‘coming cold’ to them at the point of needing their money. That way they can develop a rapport with you and track your progress over time making it easier when you really need the money to reconnect and have that conversation.”
Understand what investors want from their investment – and know what to tell them.
As well as having a network to use, and having a good relationship with them, it’s important to understand what their aims are when they invest in you. As Shane Feng (@xianglondon) of Tantrum XYZ says, “it will help you connect with them.”
“When preparing to pitch to investors, don’t focus too much on what you can or cannot do, don’t focus too much on all the wonderful things that you think your business is doing or is capable of doing. It’s actually more important to understand what investors want out of their investment. This will not only help you focus on the right sort of investors who are more likely to be interested in your business, it will also help you to connect with them. There is no point overselling how modern and how well designed your product is if all they care about is early traction.”
Try as many investors as you can
Having more options and building good relationships with a multitude of potential investors is going to help you when you come to find someone to invest in you. “Try as many investors as you can. It is never easy to find the right investors for your company.” says Jack Tang, founder and CEO of Funky Panda Games.
Having a wider pool of founders to choose from will increase your chances of finding an investor you’re happy with, and who are happy to invest in you. Even if some inevitably decline to invest, having many more options will be important in securing investment.
Seek the best investors
Funds are one thing, good advice is another. When finding a potential investor, you need a mentor as well as money. It can be the difference between making a great decision, or a disastrous one.
Ryan Perera, Co-founder and CEO of Captain.AI says: “Do not seek funds only. Instead, seek the best investors who would also be the best advisors and mentors for the product you are building.”
Finding an investor who’s the right fit can be daunting, but there’s no doubt it could make all the difference.
It’s not just Ryan who thinks you need more than just funds. Nick Verkroost (@nick_verkroost) – COO at Seenit emphasises the importance of not only building a great relationship with your potential investors, but also using that to gage whether they would be a good choice beforehand.
“If you’re trying to attract funds, make sure you’re already speaking to them one year in advance. Keep them updated with the business as it progresses and if possible, use them as a sounding board on business decisions you’re making. That 2-way exchange not only gives them great insight into how you’re building the business, but it also gives you an opportunity to understand whether this is someone you want on your Board. You’ll then be in a much stronger position when you eventually come round to the raise.”
As a final note, Nick raises an important point – make sure your business is able to deal with your added workload of pursuing fundraising.
“As a general rule whatever stage you’re at, plan to be away from the business for up to 6 months, and if you have a small team that is dependent on you being present (e.g. you’re the main sales person or the product manager), plan on a dip in performance while you’re on the fundraising trail.”
If you want more tips on fundraising, visit the first chapter in our fundraising guide here
Founder & CEO of Learnerbly
Learnerbly is a seed-funded startup based in East London. We’re passionate about learning and helping others learn. We help fast growing tech companies and creative agencies such as ustwo, IDEO and Vouchercodes.co.uk find the right learning opportunities for their teams to accelerate professional growth. Learnerbly was inspired by Enternships, a company that has helped place recent graduates into 7,000+ companies in the United Kingdom.
Founder & CEO Bidvine
Bidvine is the fast, free way to get competing quotes for local services from interested, available professionals. No legwork. No hassle.
Jack Tang CEO
Founder of Funky Panda Games
Founder of Tantrum XYZ
TantrumXYZ was set up to make parenting just that little bit more enjoyable. If you’ve got a question simply ask the Parenting Brain. If you need some inspiration or entertainment scroll through the Breader’s Digest. If you’re looking for product and gift ideas visit our shop of items tried, tested and loved by parents.
CEO and Co-Founder at Captain.AI
COO of Seenit
A video collaboration tool that enables companies to produce high impact video at scale by engaging their own communities of employees, customers and fans around the world.
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