Fundraising Playbook
Raising capital is always difficult – on average Startups get rejected over 100 times before they close a sufficient seed-round (to be clear: Investors not FFF). It’s obvious that this process wastes a lot of times for founders, as they should be working on their products, services, technologies, and clients.
Having raised money for a lot of startups and SMEs in different stages over the last years, we have discovered a pattern which will make you successful in fundraising.
Our playbook in 7 steps
1.) Build relations
Build relations in times you are not running for an investment. Investors / Fund-Managers like to get to know founders and follow their progress early. This helps them to understand your business better and it will build trust in your management capabilities.
2.) Set a Schedule
Set yourself a timeframe (e.g. 2 weeks for Research, 3 weeks for approaching, 4 weeks for first-round calls and 2 months moving forward) and be realistic about it. Fundraising takes about 3 to 6 months. Set your self a strategy for your fundraising and stick to it. Investors will understand that you do not want to waste time – therefore it’s ok to communicate a timeframe and be transparent about it.
3.) Be prepared.
Make sure you have a good FAQ for all your fundraising partners prepared and all relevant documents – legal, financial, KPIs, technology, roadmaps, strategy papers, research, etc. – arranged in a data room, ready to be shared.
Professional investors need to be efficient as well, so make their lives as easy as possible and show them that you are prepared to raise funds now.
4.) Manage your process.
You will need to manage involved team-members, Business Angels and consultants – and maybe press (if you run transaction PR to increase visibility). Therefore you should use a professional software tool to manage your fundraising funnel, tasks, documents, reports, including a growing investors database – all in one place – like foundersuite.com.
5.) A good storyline
Make sure you have a good storyline for your campaign. Investors like traction, momentum, numbers (does not always have to be revenue) and it is important to support your fundraising campaign with a strong story which gets repeatedly updated during the process. Launch successful press releases of achieved milestones, partnerships or new alliances you have been able to close.
Drip this information – piece by piece – and communicate with your audience.
6.) Be realistic about your valuation
Some startups slam doors by calling for ridiculous valuations – this is simply stupid. You should know in which area your company should be valued, but it is always to signal that you are open for negotiations. Valuations and terms play together like a swiss-clockwork and you will have to find a good balance between them.
7.) Ask for more
Make sure you ask for more than money. It’s important to understand that early-stage Investing is not like calling a bank loan. The right investor will bring your company up to speed and be worth a fortune. His reputation can even be the underlying asset, which opens doors for next rounds and exits. Ask investors, why you should work with them instead of their competitors. All the best for your fundraising!
Finally, if you need advice or simply additional (professional) resources for fundraising – we are always happy to look at your deal and see if we can be of value for your venture.
