A Thought Leadership article we liked from Visible:
How to Create a Startup Fundraising Strategy
Founders are being pulled in a hundred different directions and a fundraise is a part of that. By having a system in place, you will be able to focus on the other aspects of your business.
There is no right or wrong way to approach a fundraise but as long as you have a strong system and cadence in place you are already ahead of the curve. We recommend treating a strategy like a sales and marketing funnel. Find investors to fill the top of the funnel, both warm and cold “leads,” communicate and nurture them with email Updates throughout the middle of the funnel, and hopefully close them as a new investor at the bottom of the funnel.
Check out a few tips to help you get started with your fundraising strategy and system below:
Getting Started: Ask the Right Questions
Outline some of the basic questions that a fundraising strategy should address. When getting started with your fundraising strategy it is important to understand why you’re raising, who are you raising from, and the financials of your round. Check out a few example questions below:
- Why is your startup raising capital?
- Who is your startup reaching out to for financing?
- How much capital will your startup raise – now and in the future?
- When is your startup raising capital?
- What is your startup’s process for raising capital?
Before even building out the rest of your fundraising strategy you need to be able to properly answer the questions above. You may learn that venture capital is not the right financing option for your startup, which is totally fine! (Related Read: Checking Out Venture Capital Funding Alternatives)
Related Reading: How to Write a Problem Statement [Startup Edition]
Undergo a Valuation of Your Startup
Of course, a major aspect of raising capital is the valuation of your company. Setting a valuation is generally a mix of art and science, especially at the early stages.
As the team at Silicon Valley Bank puts it, “The most basic valuation method borrows from the playbook used by realtors, who assess the value of a home by looking at “comps,” or comparable homes. Mendelson recommends establishing a startup’s valuation that is “on scale” with those of other early-stage companies. The more similar the startup — be it its sector, location or potential market size — the better.” As your company grows and raises later-stage financing, setting a valuation will be based more on the...
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Thanks for this article excerpt to Visible.
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