Shh! Don’t Share These Fundraising Insider Secrets

Be Realistic About the Amount you Want to Raise

Founders need to spend time planning their approach to a fundraising round. While it includes getting all necessary documentation together and perfecting your pitch, the other really important thing to decide on is the amount of money you are looking to raise.

At first glance, it may appear that getting as much money as possible is the right way to go. This should not be your approach because it is often the case that more is not always better!

Going for and taking bigger investment amounts than you need is putting additional pressure on yourself and your business. It means you will have to make faster progress in terms of such things as agreed growth goals and the need to show faster returns on investment.

Founders should look at a fundraising round as a means to an end, not the end game. You should think of any fundraising initiative as a stepping stone to the next milestone in your startup’s development.

To do that, factor in the following:

• The length of time in months you feel is required to reach that next milestone.
• Total up all current monthly recurring costs (office rental, utilities, current staff salaries, etc.)
• Forecast all additional costs required to take your business to the next milestone.

This will include such things as new hires, any prototype development costs, increased marketing costs, and other outgoings that will come into the equation.

• Don’t forget to add in an additional 20-30% cushion to the figure you come out with. That will help guard against any unexpected or unseen costs that arise. 

Once you have the final required amount, stick to it and that is the amount you are looking to raise.

Horses for Courses

It is a fact that not every investor type will be interested in your business product or service. Investors have their own reasons for preferring to go with one business sector over others. This means that founders need to focus on investors who align with their product or service and that their criteria for success broadly match yours.

To find the right investor fit for your business plans and growth, homework is required. Look into investors you feel match your aspirations, and check out startups these investors have already invested in.

Don’t be shy to seek out the founders of these companies and talk to them. Direct questions should be asked, you need to get a feel of how smoothly things are running and how supportive the investors have and are being.

Weighing up the pros and cons of the type of investing partners you want will help when deciding on investors or firms that fit your current startup stage.

Early-stage Investors vs Multistage Investor Operations

Some pointers here are that early-stage investors tend to have smaller funds. This generally means the investment amount they are willing to give can represent a sizable portion of their total fund.

It follows that early-stage investors will be more motivated to get your company to its next stage. Their approach will be to work hard with their connections such as potential customers, partners, and talent on your behalf.

As for a multistage fund operation, their first investment amount will be a drop in the ocean in relation to the total amount of funding they have available. It can often be the case that full partnership approval is not required. What that means is that venture capitalists at these firms are ‘buying’ a call option. One that will allow them to invest in your next round of funding.

With that in mind, it is likely they will have less skin in the game and be less likely to go full tilt in making further connections on your behalf. It is also the case that more multistage firms than ever before are now investing in startups earlier and earlier.

With that in mind, founders need to be aware that this type of investor will have far more information available than any potential new investor. This could mean that if they decide not to invest further this is signaling to other potential investors that they do not think your startup is one of their top performers.

Founders should not always think going with a multistage fund is a bad thing. This particularly applies to your first or early fundraising rounds. Why? Because if you are performing well they have deep enough pockets to preempt your next funding round. If they do this, it is saving you from going through another fundraising cycle because you can double down with them.

An insider fundraising secret you should be in on

It is clear that effective fundraising is an art. While founders of startups are not expected to know everything there is to know about it, they do need to understand the fundamentals.

But there is one way that founders can gain a huge advantage. This relates to securing the funds they need to successfully move their company onto their next milestone and beyond.

That is by taking advantage of some seriously deep startup fundraising knowledge and know-how. This is where WOWS Global can be of huge benefit. Our highly experienced team is fully-focused on all aspects of startup development.

When it comes to the complex art of fundraising we are perfectly placed to assist. WOWS Global is ready to advise, guide, and assist founders from the start of their journey through as many funding rounds as are deemed necessary.

We have the inside track on what investors are looking for and our state-of-the-art, online digital ecosystem has been designed to make things easy for founders and investors alike. WOWS Global is here to give founders direction and to align the right type of investor with your specific startup needs.

To find out exactly how we can put you ahead in the fundraising stakes please do not hesitate to get in touch with us now at: contact@wowsglobal.com