Fundraising for your startup can be one of the most important and stressful times. Whether your startup is specializing software, ballet products, or revolutionary medical equipment. When done right, it can lead to partnerships with angel investors and venture capitalists that lead to millions of dollars to grow your business. If done wrong, it can lead you down a long road where you begin to second-guess your business and model.
Raising funds for your business takes a lot of planning, a lot of patience, and a significant amount of time preparing pitch decks and financial models.
So how exactly do you start to fundraise for your startup?
The Pitch
Well, regardless of whether you’re getting seed funding or going for series A, you always need to have the perfect pitch. The trick to having the right pitch is to keep it short and sweet, and most of all, be passionate. Don’t worry about providing too many statistics, just remember to tell your story and include the details listed below:
- What your company does
- What problems or pain points your product solves
- Have you created technology for this?
- What’s the size and level of competition in the market?
- And most importantly, why will people love your product?
Mastering your pitch is the first step to raising capital for your startup. Funny story, I once spoke to a CEO who said that vacations were his best testing grounds for his pitch. He would sit at the hotel bar and just pitch to random strangers. By gauging the interest and excitement he got from these strangers, he would know that his pitch was heading in the right direction.
The Pitch deck
Did you think all you would need to get together is your pitch and you’d get thousands or millions of dollars thrown your way? Wrong. After you get your pitch together, you need to carefully assemble your pitch deck. A Pitch deck is a very important fundraising tool. Examples of a good format for a pitch deck can be found all over the web. However, Forbes has a great breakdown here. They break it down into 11 basic slides for your pitch deck.
- Vision/ Elevator Pitch
- Traction / Validation
- Market Opportunity
- The Problem
- Product / Service
- Revenue Model
- Marketing and Growth Strategy
- Team
- Financials
- Competition
- Investment ‘Ask’
Pitch decks are great tools for raising capital for your startup, and are a great way to segue to and from introductions. You can find a collection of some great pitch decks here.You’ll need to leverage your connections and have them provide brief information about your company, as well as your pitch deck. This allows investors to quickly scan what it is you do, and decide whether it’s worth actually meeting you.
As you present to more and more investors, your pitch deck will become your best friend. You’ll carry your pitch deck with you wherever you go, and constantly nitpick at little details.
Greatest Lesson In Fundraising
Yes, you constantly read TechCrunch or VentureBeat, hearing about businesses getting multiple rounds of funding, or the latest startup getting sold for millions. But the truth is startups don’t raise capital overnight. It’s a long and sleepless process with most members of a team spending all night perfecting their pitch deck before the next investor pitch.
Ben Liu the Head of Marketing at Carkibo, a startup that specializes in simplifying the car selling process, is currently working towards raising capital to scale their operations. According to Ben, the biggest lesson a startup needs to learn fast is “Patience. getting funded is never a one night thing. We’ve pitched to dozens of investors and each time is a new learning experience where we continue to find new ways to evolve.”
Hundreds of businesses often embark on this journey to raising capital, not really aware of the journey they’re taking. When asked about the amount of work fundraising takes, Ben was quoted saying, “Sleep? I barely remember what that is. I’m constantly pulling all nighters to make sure everything is as perfect as possible. People say that working at a startup is about a 15 hour/day job, but when you’re trying to raise capital it becomes more of a 24 hour job.”
Other businesses looking to raise capital should make sure to take a page out of Carkibo’s book. Patience and preparation. Ensuring that you know why you’re seeking funding and providing the relevant cash flow analysis and financial models will be a key to a successful pitch, and put you on the road to funding.
If you think you may have some difficulty putting this information together or would like some extra help. Feel free to contact us. We provide a number of services such as interim CFOs, financial planning, and strategic consulting to help you get everything in line to present to VCs and other investors.