Startup Fundraising 101: Getting Ready To Raise A Round

Startup Fundraising 101: Getting Ready To Raise A Round

 

EGFS COO Sirk Roh and Shayne Veramallay of DLA Piper covered fundraising basics from strategy to tactics to pitching, in our recent Inside Startup Fundraising 101: Are You Ready For An Investment Round? webinar. Be sure to check out the deck on SlideShare for more details. For now, here’s a quick rundown of the highlights:
InvestmentRound
First things first. Why raise funds? This seems like an obvious question but you need to be clear why you’re looking to raise in order to come up with an effective game plan and determine your best funding option.

The bottom line is that you should raise to accelerate growth and in order to optimize market timing. You don’t raise as a way to test your idea. It’s about explosive growth and getting quickly to an exit.
And when it comes to timing, wait until you’ve come up with a working prototype and developed your product before you seek external funding.

Start with your fundraising end in mind

If you don’t have a realistic exit strategy, stick to bootstrapping for now. Investors won’t be interested if there are no visible potential exit pathways.

There are different paths to getting funding, but the stage your startup is in, your business model and operating dynamics all determine your optimal funding strategy.

There’s plenty of capital out there, but there’s also a lot of competition for startup funding. According to Shayne, only 1 out of 1000 business plans might get VC funding. His best advice: take capital where you can get it.

Here are the most obvious funding sources:

 

Set your fundraising expectations:

 

Funding Vehicles

 

Funding Strategy


Making the funding pitch:

We get a lot of questions on whether founders should present bottom-up or top-down financial models when working on startup fundraising. For our take, read David’s post on Bottom-Up vs. Top-Down Forecasting.

In Shayne’s view top-down financial models are “the last thing you want to do” because they indicate a “poor level of sophistication.”

Thoughts on pitching? Tell us about it in the comments section below or contact Early Growth Financial Services for fundraising support.

Deborah Adeyanju is Content Strategist & Social Media Manager at Early Growth Financial Services, an outsourced financial services firm that provides small to mid-sized companies with day-to-day accounting, strategic finance, CFO, tax, and valuation services and support. Deborah is a Chartered Financial Analyst (CFA) charterholder with more than a decade of experience as an investment analyst and portfolio manager in New York, London, and Paris..

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