Raising funds, whether launching a new company or entering your next round, can be a tedious and emotional process. A process that tends to be different for everyone and unique to the type of company you want to build and grow. While the options and methodology may seem daunting, there are key considerations to keep in mind no matter which route you decide to go. Here are the five best practices to consider using when thinking about fundraising.
Set and Understand Expectations
Whether you are a team of one or have board members and investors to which you report, setting transparent fundraising expectations is essential.
Tell Your Story
Storytelling is vital. As much as investors want to fund your business, they want to invest in you! In a recent Forbes article, it was noted that, “without a doubt [fundraising] is all about mastering storytelling. Investors are not investing in your past or your present. They are investing in your future”. No matter when you fundraise, you are conveying the story of your past as well as that of the company. Stay true to the story of how you pivoted as your vision came to fruition.
In each stage of funding, there will be pitfalls. Avoid a false sense of pride if you gain early traction and spend sensibly with those gains. Raise capital, but do not rely on a lone investor or group. Understand how much ownership you hope to maintain as you enter each funding round. If you offer equity, investors assume a stake in your company, and with that comes an assumption of rights in key decision making. Monitor would-be compliance issues. Scrutinize the terms of the agreements that arise to avoid conflict or contradiction in the terms mentioned in the contracts between investors and your company.
Differentiate Your Vision
In each funding stage, be creative. While you want to differentiate yourself so others see your vision as a unique opportunity, use companies with similar business models to learn valuable lessons for best practices. Advertisers who see a benefit in partnering with you may also want to invest. Use social media to post pictures, share exciting news, or to capture a story. Attend social events in your community and industry at large. The more you put yourself out there, the better chance you will make connections that could help your funding.
Build Your Communication Strategy for Shareholders
Your investors become just as important as the funding you hope to raise in your next stage. As soon as you raise your capital, be sure to follow best practices when communicating with your shareholders. Nth Round’s eBook, “An Executive’s Guide to Shareholder Communications” offers excellent advice on how and when to best convey information. Nth Round offers the tools to help you with any of your fundraising needs, manage your equity, and create transparent communication with shareholders.
Amanda joined Nth Round inspired by the vision, passion, and relational-driven mission of the company. A trained historian, Amanda enjoys the daily analysis and research she uses to better understand and connect to clients on a more personal level. A successful athlete and scholar, Amanda captained the field hockey team at Stanford University, earning Academic All American and all conference honors during her time there. She leads Customer Success, providing an enjoyable experience for clients through her support to ensure success for companies and their shareholders.