Checklist for Raising Money for Startups

Startups are constantly competing for two resources: Talent and Funding. Raising money via venture capital is one of the most popular methods for startups to obtain funding. But getting money for a startup, particularly one in its early stages, is no simple task. You must have a strategy and procedure in place before starting your raise in order to increase your chances of success.

A fundraise is frequently compared to a conventional B2B sales process. At the top of your funnel, you add potential investors (leads), nurture them with updates and meetings in the middle, and hopefully close them as new investors at the bottom.

A founder should have a procedure in place when looking to raise capital, much as a sales and marketing team does when looking to acquire consumers.

Refer below checklist for out next fundraising with Investors:  

1) Display Growth and Traction

First and foremost, you must confirm that your startup is capable and can raise venture capital. It is crucial to show that you can produce enormous cash flow for them because investors typically take a big risk when supporting startups. The expansion and traction of your business will be one of the key factors investors will consider.

Why this Is Important ?

Investors are taking a risk, as we just discussed, therefore they want to know that your startup has the potential to develop into a significant business. Showing constant and rapid growth from one period to the next is the simplest approach to do this.

2) Define your Startups Milestones and Fundraising Goals

It's time to create milestones and targets for your fundraise if you've decided that your company is ready to raise venture capital. Before speaking, there are a few things you should consider and ask yourself:

• How much capital do I want to raise?
• When do we need new capital by?
• What valuation should we raise at?
• What will we do with capital once it is in the bank?

Why this Is Important ?

Before starting a new acquisition campaign, you undoubtedly have goals and benchmarks in mind. This also applies to fundraising. If you have a list of milestones and targets in place, you will be able to respond to any questions from investors because you have already done the research and will appear well-prepared and systematic in your raise.

3) Make Sure you have a Compelling Pitch Deck

Fundraising is ultimately storytelling. Your goal should be to pique the interest of your investors and strengthen their resolve to make an investment. A pitch deck is among the most often used tools for conveying stories.  

Why this Is Important ?

Investors frequently lack context on your company and its market. You need to equip them with the appropriate knowledge and resources to act as early as possible to invest in your business in order to assist them in developing conviction about your enterprise. A pitch deck is a fantastic resource to share with potential investors and use as a manual for your fundraising.

4) Prove Your Product/Service is Scalable

Investors prefer to support startups that have the potential to grow into significant enterprises and make an exit, as we have discussed. They'll pay particular attention to your capacity to expand your clientele and generate substantial revenue. Investors might request to see some of the following during your raise:

• Metric growth as it relates to your acquisition efforts
• How your current acquisition strategy works  
• Stories from customers that show you have happy customers

Why this Is Important ?

Investors are unlikely to be interested in backing your startup if you don't have a clear plan for growing your revenue. You must provide evidence that you have had success in the past or that you have a strategy for increasing revenue in the future. Investors will be more likely to invest in your company if you already have a successful acquisition plan since you can show them how their money will expand the company through your current channels.

5) Build a List of Investors

A venture fundraise begins with identifying your ICP and potential customers, just like a sales process does. VC funds invest in a variety of startups, including those in early-stage, late-stage, new markets, old markets, small teams, large teams, etc.

We advise beginning by compiling a list of 50–100 potential investors that you feel are a good fit for your business and remaining focused on them throughout your fundraise.

a) Location

What city are you in? Are local investors required? Or perhaps you're seeking for contacts and networks in key regions

b) Industry Focus 

What kind of business are you? What should your prospective investors and partners concentrate on? e.g. Do not waste your time with investors who are only interested in the market if you are a B2B SaaS startup. Mark Suster advises that it is best to give investors with businesses in your sector priority.

c) Stage Focus

What size check/round are you raising?  

d) Current Portfolio

What kinds of businesses ought to indicate to you that they're a good fit? Is it likely that they have money invested in one of your rivals? If so, it is wise to steer clear as they are unlikely to place a second wager with a portfolio company.

e) Motivators

What do your investors want from you, and what do you want from them? Do they have to share your culture and values?

f) Deal Velocity

Do you require money as quickly as possible? Are you putting off your search for strategic investors? Various investors have different attitudes on the speed at which they close deals.

Why this Is Important ?

When pitching investors, it is not a good idea to randomly contact any of them. Make sure your time is being spent on the investors who are most pertinent to your company. You may tailor your outreach and ensure that you are devoting time to the ideal investors for your company by starting with a list.

6) Tell a Story about your Company

A great fund raiser includes storytelling, as we just discussed. Metrics, data, traction, etc. will undoubtedly get investors' attention, but they probably won't write a check for that reason alone. It is your responsibility as the founder to create a captivating story about your company that will aid potential investors in developing an emotional connection with it. This may include information about your past, your company's inception, customer success stories, etc.

Why this Is Important ?

Although a VC's responsibility is to produce returns for their limited partners, investment still involves dealing with people. In general, investors invest in the founder, particularly in the early stages. You need to tell them stories that will give them a different perspective on your company in order to assist them develop confidence in you and your organization.

7) Introduce your Team and Stakeholders

Of course, a business is not just run by its founders. Your company may have had co-founders or early employees who contributed to its success. Make sure to brief your present teammates and let them know how the increase is doing. Investors are interested in learning about your team members and first employees to determine how well-positioned your company is to solve the problem at hand.

Why this Is Important ?

Investors typically wager on the team and the company's vision in the early stages. To determine if your team is the proper one for growing the business, they will look to your early hiring and leaders. They'll probably want to see the skills, roles, and personality attributes that set your team apart from the competition.

8) Include a Cap Table

The ownership and equity that come with investing in private businesses is one of their advantages. Investors will therefore demand to see your company's ownership structure. A cap table typically serves this purpose best. There are numerous solutions that can help you easily share your most recent cap table.

Why this Is Important ?

Another technique for explaining your company's structure to VCs is cap tables. They will gain a better understanding of the investors they will be dealing with as well as their eventual ownership position. Even while you might not have to share a cap table with investors right away, you should make sure it is current and prepared for when you need to raise money later on.

9) Signup For a Fundraising Relationship Platform

Your fundraising efforts should use specialised tools, just like a sales and marketing team would. You'll be able to spend more time on what really counts, developing your business, by finding a tool to track and manage your fundraising.

Why this Is Important ?

Not only will having a dedicated location to monitor your fundraise and investor relations help you speed up your fundraise, but it will also free you up to concentrate on growing your business.

About Jordensky

Jordensky Can Assist With Your Fundraising

Fundraising is challenging. Jordensky's goal is to support more companies in their endeavours. You can use the tools we've created to assist you at every stage of your fundraising endeavour.