There’s no ‘one size fits all’ approach when it comes to venture funding rounds. Raising a Series A is very different from a Series B or C, and each process has its own unique timelines, uncertainties and pressures.
Whether you’re pitching to an angel investor or a VC firm, securing investment is no small feat. You’ll need to demonstrate tangible value and confidence in your company’s future in every conversation. And while you might find a perfect partner quickly, fundraising can take a long time, testing your endurance as well as placing additional burdens on the rest of the team with your time tied up in investor meetings.
Developing a vision of the process ahead of time is fundamental. In this article we’ll run through some tips on how to draw up a comprehensive but flexible fundraising roadmap, so you can embark on your fundraising strategy with purpose and confidence. Read on to learn more.
Many founders are highly familiar with finding their company’s why. As useful for external communications and storytelling as it is for motivating and aligning the team around a shared mission, a company’s why also matters when raising money. What does your company exist to do? And why are you uniquely positioned to execute on your mission? Investors are people too: as well as thinking about the numbers, they want to be excited and to believe in the founder’s mission.
Which brings us to the how: what is your plan for achieving your mission and fulfilling your company’s why? And, of course, what do you actually want to raise money for? Is research and product development the central challenge? Are you planning to hire quickly or expand internationally? Each question helps enhance investors’ understanding of your business and the opportunity.
At the pre-seed stage, your “how” may be “to get started and develop a product prototype.” You’ll probably spend lots of time refining your vision, hyping your rag-tag expert team and outlining growth projections (should you land that all-important capital).
While raising seed or Series A funding, it might be sensible to still be searching for your why. Later on, though, you will be expected to have a clear sense of what your company exists to do, and exactly who your target market is. Remember: the expectation for data and detail to underpin your assertions will be higher every round.
Let’s move on to the who. Raising money is one thing, but the investor you raise money from matters hugely too.
Angel investors and VCs each have individual backgrounds, areas of expertise and contacts. One investor might be very hands-on with advice, while another might focus on giving you the space to make your own decisions. It makes business sense to perform due diligence on your investors, too, and the best partners will welcome this scrutiny.
In autumn 2021 we announced our $10 million Series A round, led by Sequoia Capital. We learned a lot from the process, and we hope some basic principles that helped guide us through might benefit other companies in a similar situation.
Fundraising takes a lot of time. Founders are often nervous about neglecting other areas of the company. To compensate for your extra workload, you might need your team to step up and take on some additional responsibilities. It’s best to communicate any changes ahead of time, informing team members about how their roles will evolve, and what their adjusted performance expectations are.
Ledgy’s intuitive equity management software helps you generate greater insight with your equity data. You can share documentation and updates with investors, model different scenarios, and make sure the whole company sees the impact of new funding in their ownership stakes.
Book a call with us today to speak with one of our product experts and learn more about how Ledgy can contribute to successful funding rounds.