Thinking about raising capital to scale your venture? Position yourself for investment success.
Raising capital for your business can be a challenging and time consuming process.
The good news is that there are things you can do to relieve some of the pain and possibly shorten the timeline to funding
By understanding your investment readiness you’re better equipped to approach potential investors and have more engaging and productive conversations.
If you’re considering raising capital in the next 12 months, consider the following points before
you reach out to investors.
Create a compelling opportunity and be clear about the value the venture creates
You may be facing a cashflow crisis, but investors are looking for an opportunity so make sure you understand the value of your current business and the value that their investment
Know your business as well as you know your products, customers and markets
You need to know your customers, markets and products like the back of your hand and you need to be as familiar with your business numbers, drivers, sensitivities and risks. Develop meaningful KPIs, ones that really impact the success of your venture.
Investors expect growth and a healthy return on their investment
Investors want to know their money is in good hands, how you’ll spend their money and how that spend will drive the growth you’ve promised. It’s a good idea to have your roadmaps prepared and aligned so you can be transparent with these. Know your priorities post raise and clearly articulate how you’ll achieve the growth that you’ve promised.
With growth and high returns comes risk, that you have to manage
Early stage ventures are tough; most fail; investors know and accept that. You’re competing for their dollars with many other great ideas and great teams so it’s important that you understand the business risk of your venture and you demonstrate how you’re working to manage those risks for your investors.
Pivots are expected
Investors expect ESVs to have experienced and weathered crises. Consider this a good thing. Investors aren’t looking to catch you out, they’re trying to determine how resilient and agile an investment you are - how you manage high stress and extremely difficult situations, how well you respond to market conditions and customer feedback, what calculated risks you’ve taken and how you navigate your venture and your team through the chaos and continue to create value.
make it easy for investors to say,“Yes!”
Be realistic about your deal
Valuing your venture pre-money can be a dark art and your future investors will typically have a view that’s somewhat different from yours. Understand different valuation principles and how they apply to your venture. Everyone hopes for a ‘unicorn’ but your valuation has to be grounded in reality; a mythical valuation will kill your integrity.
Know the type of founder that you are
Everyone has strengths and it’s your job as founder to understand your own strengths and weaknesses and how these impact the venture. The growth and people plans for your venture should reflect this understanding - bring in the right people for the right roles, even if that means you need to recruit a CEO.
Know the type of Investor that’s right for you
Your investors are your strategic partners and they will naturally have an interest in how you and your venture are performing - some will even take a “hands on” approach. Think about the skills, experience and networks of your investors. Consider your investors as part of your team - the right ones can be add enormous value to your venture.