Sometimes Main reason for startups fail is lack of financing and investor interest. That is why fundraising is an important part of a startup journey. There are some Fundraising Tips which might increase your chances for success in closing your next investment round.
To accomplish its business objectives, any startup needs to raise money. The funding process and fundraising are essential to a startup. A startup’s growth can be greatly influenced by the combination of these two business components. A startup investor must carefully plan his action in accordance with the goals of the chosen business organization when he finances a start-up, whether big or small. But, the type of results a start-up is aiming for will affect the funding plan. In this blog we will discuss Best 8 Fundraising Tips for Startups and Founders.
As part of the modern business scenario, funding and fundraising play an important role in supporting a startup’s development. An organization is responsible for managing many financial tasks. This can be accomplished when the right funds are allocated to the right activities. Similarly, fundraising involves raising funds to meet the startup’s defined financial agenda.
In order to be a successful CEO you must build a compelling product, hire a great team, maximize sales, and satisfy your customers. While these topics are very important to a first time CEO, they may distract them from another task they should not neglect: ensuring that the company will raise funding at increasing valuations.
In practice this means that the CEO should:
- Ensure they are aware when their cash runs out
- To get a higher valuation, you need to know what milestones have to be reached before then
- Identify the right milestones and timeframe for achieving them
- You must consider which specific milestones you plan to reach before your cash out date when managing your cash out date.
Below are the Top 8 Important Fundraising Tips for Startups
1. DON’T RAISE MONEY QUICKLY
First and foremost, you will probably give away too much equity. Secondly, as soon as you get an investor onboard, you will become obliged to approve and confirm your decisions, which is not always easy and prompt. That is why it’s better to get as far as possible on your own and then find a partner to boost your growth.
2. ESTABLISH A FUNDRAISING PLAN BEFORE YOU START
Most important fundraising Tips for startups is establish fundraising plan. Start raising financing before running out of funds. Because it can take as long as six to nine months to finalize the fundraising process.
3. REACH OUT FOR FUNDING FOR YOUR START-UP
There are industry standards toward startups at each stage of development. Investors won’t talk to you unless you meet those. Check that your progress, cap table, team composition, tractions, etc. is sufficient before you start fundraising.
4. SELECT YOUR INVESTORS WISELY
Remember that as investors will perform due diligence of your startup you should make the same in their respect. Don’t accept every offer you get, select the perfect investor for your startup. Investors shall bring value not only with their money but with expertise, network, and support.
5. A FOUNDER NEEDS NETWORKING SKILLS
Start building your network of investors as early as possible. Mind that investors’ relations are like any other kind of relationship; they need to be nurtured.
6. PREPARE YOURSELF
You should be fully armed before you kick off the fundraising process. Prepare all the necessary documents, make up your mind on how the deal should look like, agree with the core team, check that everything works well within the team, with the product, and with your clients. Note that some doors can be opened only once.
7. 100% DEDICATION
Investors expect you to be focused on running the business and dedicate 100% of your time to it and not to have any side projects that distract you.
8. PROCEED WITH CLARITY
When raising funds, you should not only plan how you will spend the money, but you need to think about the results you want to achieve, the roadmap, and the next rounds. You can’t look for new investors every 6 months as in this case there is no time to actually perform.
Keep all this in mind and go get funded!
Related Article: Top 5 Effective Startup Funding Stages