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February 14, 2023 | 5-minute read (826 words)
Raising funds is a critical part of running a profitable startup. As a CEO or CFO, it’s your job to make sure your company is well-funded throughout every stage of growth. With solid funding in place, and investors on your side, your startup can be equipped to reach its biggest goals.
To make the process of fundraising a little less daunting and a little more effective, it’s important to keep these four best practices in mind. With the right research, preparation, confident delivery and timely follow-up, you can be well on your way to successfully raising the funds your business needs.
Before you begin raising funds, do extensive research about the investors you’ll be targeting, the goals you’re aiming for, your company’s current health and the market. Investors want to see that their investments will be used effectively.
When you prove you know your position in the market and have a strong, data-backed grasp of your future growth potential once this capital comes through, investors will be more willing to invest in your business.
Be sure to research common objections your potential investors may have. If you know what concerns these investors are likely to raise — and what they want to know before signing a check — you can pull the data and research you need to prove why your plan will work.
As you’re selecting the investors you want to work with, research the kind of investments they’ve made in the past. If your business is similar to one they’ve partnered with before, use research to show why this is another smart investment for them. If you’re different from their past investments, prove why you’re worth the consideration.
Before you walk into your investor meeting, be ready to meet any question or challenge head-on. There are several ways you can prepare for your big pitch, and this groundwork is even more important when pitching in a downturn. For example:
Raising funds is easier when you’re confident in your pitch. The more you can practice your presentation, the more confidently you can deliver it — and secure the funding you need.
During your practice session, you should focus on delivering a concise and clear pitch that highlights the key points of your business plan. Once you have your pitch thoroughly memorized, practice responding to the investor’s questions. You can look up common questions this investor asks, or watch interviews to gather insights. Practice answering their questions clearly, simply and enthusiastically.
Finally, practice summarizing the key points of your business plan and asking the investor for the funding you need. This is the step that unnerves many CEO and CFO funding seekers! But practicing your request until you can strongly ask for the funding your business needs is crucial to securing the deal and reaching the next stage in your business.
The final key consideration CEOs and CFOs should keep in mind when raising funds is the art of following up. It’s important to follow up quickly, while your potential investors are still excited and interested in your opportunity.
Following up with your investors shows that you’re serious about the investment and the value you offer them. It also gives you the opportunity to clarify any issues that may have arisen during your pitch meeting, and share additional information they may have requested.
Every follow-up conversation, whether by email, phone, or in person meetings, should end with a sincere “thank you.” Offer gratitude for their time, consideration and feedback. Even if the investor chooses not to offer capital this time around, keeping that relationship warm and friendly opens opportunities for raising funds in the future.
As a CEO or CFO of a growing startup, raising funds is almost a necessity. That’s why it’s essential to keep these fundraising best practices in mind throughout every round of funding. Doing your research, showing up prepared, delivering a confident, well-practiced pitch and following up with investors gives you the best possible chance of raising the funds you need to reach your next level of growth.
As a professional copywriter in the finance and B2B space, Grace Townsley offers small business leaders big insights—one precisely chosen word at a time. Let's connect!
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