Fundraising is Different for Everyone

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.

• Define your starting point. Different stages of fundraising require different expectations and there is no one right way to tackle your goals.
• Calculate your projections. Traditionally, the amount of time a funding series took followed a 12-month cycle. Now the amount of time a funding series takes can vary. The number of times startups are going back to the market to raise capital has increased. Therefore, the amount of time in which funds are raised can vary anywhere from 3 to 12 months.
• Set a course to best reach your fundraising goals. It may be better for your startup to start doing 6-month cycles. Using smaller fundraising cycles will free up your time to focus on building your company, avoiding the stress of a fundraising series.

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.

• Be passionate about your story. When pitching your ideas be sure to show your passion and exude confidence and belief in your vision.
• Your investors are taking a risk. Early funding rounds are often supported by friends, family, or single investors who help raise capital quickly. These are individuals who believe in you.
• Be respectful of investor’s time. When pitching to angel investors or VC groups, most pitches are timed. You must show off your ideas and convey your passion as quickly and efficiently as possible.

Anticipate Pitfalls

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.

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