It is rare to ever hear any entrepreneur say “raising that round of capital for my business was fun”. It is not usually fun.
It takes up time and takes you away from growing your business. It does not have to be your worst nightmare, though. Entrepreneurs shouldn’t be reluctant to look for the funding they require.
Even though they may be negotiating with experts who regularly close deals, they can still make efforts to ensure they acquire the money they require when they need it on terms that do not limit their options for the future.
For every procedure, there are undoubtedly some tried-and-true best practices that can simplify your life while frequently ensuring success. Here are a few crucial actions to take when raising capital for a business:
1. Your big idea or product is not enough in raising capital for your business
The majority of investors, regardless of your stage or the amount you are raising, must first see the following three things before they will even consider investing:
A strong total addressable market, a vetted and experienced team, and an intriguing product and vision that supports their theory are the first three requirements.
There has been some debate over which of these is most crucial; in my opinion, the bigger the market, the better. If the market is not broad enough, everyone will be struggling to create a successful enterprise, even with the best product in the world and a team of superstars.
2. Giving the impression of traction is a step to raising money for your business
A successful increase entails instilling a deep-seated fear of being left out (good old “FOMO”).
This procedure must be backed up with an actual presentation of the evidence of traction to investors, acceptance and validation in some manner, curation through appropriate introductions, combined with an engaging pitch and storyline.
3. Raise the appropriate amount of money for the stage you are in
Do not go to the market hoping to raise a $10 million Series A if you have a SaaS company with a product for enterprises, have only recently demonstrated product and market fit, and have not yet produced real revenues.
It will not happen unless you have made a lot of money before or your parents are limited partners in the fund.
All things considered, fundraising is challenging for any business, but it can also be a rewarding experience where you get to know some of the most fascinating and intelligent people in your field and forge future connections.
Accept all of the helpful criticism you will get, look at it as a learning opportunity, and use it to improve your general plan and approach. Most importantly, practice patience, learn to accept rejection, and never quit.
4. In raising capital for your business, investors will move as fast as you want them to
Investors share the trait that nobody hates to miss out on a deal, and they will act on your instructions.
It’s your responsibility to advance the pack by showing good timing. The investors who are most interested will show up and request a term sheet, while the investors who are least interested will drift to the back of the group.
5. While raising capital for your business, you’ll never have control over timing
Even at some of the largest VCs, smaller groups make the investment decisions, and occasionally they are delayed by other commitments that prevent them from being available (IPOs, sales, and dispositions of their portfolios).
These things happen, and you have no influence over them, so don’t worry about them or take them personally.
The legendary soccer player and Brazilian ambassador, Edson Arantes do Nascimento better k…