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A founder’s guide to startup fundraising in 2023

The last several years were all about big valuations and less about demonstrating peak operational efficiency across the whole business. Even if you didn’t experience this first-hand as an employee or startup, the sheer amount of funding distributed only last year shows it.

2022 was slightly different, especially due to round sizes and valuations coming down (or normalizing), and persistently high inflation.

Keep reading to discover some surefire tactical tips a successful founder would share.

Go beyond your pitch deck

Obsessing over creating the “perfect” pitch deck is easy. However, you should resist the urge to present it slide-by-slide to your investors. Don’t expect a polished deck to persuade investors to jump on your project and risk their money to fund it. Instead, learn to use your deck as a visual aid or a tool to enhance your pitch’s narrative.

Save time to engage with the investor before your first official investment meeting, and use that time to walk through the deck together. If you let them walk through it independently, you risk not communicating your ideas clearly, and they may form an incorrect opinion unrelated to your story.

Create a staffing strategy

You must show you have adequate staff. Or at least show investors how you’ll adjust your staffing strategy after you receive their funds.

It would be best if you had the following positions on your team:

  • A business leader (CEO)
  • A commercialization leader (CCO)
  • A tech leader (CTO).

Also, don’t confuse the staffing strategy with the recruitment strategy because the first one is an ongoing process and more like a “people strategy”. You must analyze people patterns, establish your current people landscape, identify staffing needs, develop a strong workplace culture and constantly review for your startup fundraising to succeed.

Foster the FOMO

Remember that you’re aiming for a straight answer from an investor. Some express interest in a project and ask to be kept in the loop, which may sound like a lead and an open opportunity, but in reality, they need more time. This is a trap you can fall into, especially when inexperienced. No investor wants to be known for saying “no” to a business that turns out to be a unicorn, so they will drag the founders along in the hopes that someone else will step in to invest.

Of course, you don’t want to be too pushy, so the most successful approach is to remember that what you’re offering is a fantastic business opportunity. Investors may be risk averse, but they’re human, too. If you’re telling the story well, they’ll likely want to take advantage of it.

Play on it and gradually persuade the investor to commit to a follow-up.

Manage your equities

Managing is tricky by definition. You have financials, legal documents, KPIs, etc. How are you going to store all the data effectively? Investors seek organized individuals who can manage everything from their stocks to their ESOPs.

Investors want to see you reserving enough capital for your future employees and yourself. A healthy cap table demonstrates your company’s potential for development and shows your CEO skills.

To create and maintain a cap table, you should use a program. Today, cap table management for startups is made easy through software. You gather all your business’ securities, like warrants, common and preferred shares, options, convertible notes, etc., in one app, no matter how simple or complex your project is.

Be realistic when asking for an amount of money

Consider the stage you are at when asking for money. Let’s face it, asking for a lump sum of one million dollars to make a life-changing mobile app is a pretty big ask. You must go step by step, and your funders will feel involved and valued.

Determine how much money you need in the forthcoming 12–24 months. Do you need money for the end product to get it on the market? Then raise it, and when your first goal is achieved, let funders know what you did with their money and see if they want to put in more.

When seeking funds, you should also consider the roadmap, the results, and the subsequent rounds. You can’t reach out to new investors every six months because you run out of time to actually perform.

Get information upfront

“Pick an investor like you’d pick a spouse,” as Tim Berry, a business writer, once said.

To make the most of your time, you must determine which investors will not be a good fit. Try to assess their investment profile in the first meeting, be it via email or on the website.

Here are some key questions to find answers to:

  • What’s the diligence process?
  • What’s their ownership target?
  • Is the investor process firm-led or partner-led?
  • How long does the process usually take?

Be well-prepared

Last but not least, investors want to see transparent and well-prepared founders who know their businesses by heart. You can’t predict investors’ questions, so you should prove that you’re honest and that you want to offer a fair deal, and spend time on the following tasks:

  • Have a well-done funding spending strategy
  • Know the industry you’re getting into
  • Know your competition.

Time kills deals; speed wins them.

In today’s economy, speed is everything. If the investor you’re talking to is moving you quickly through the diligence process, this might be a sign of enthusiasm and show they’re working 

to share the deal with their team, so they can make an investment decision quickly. However, if the pace of engagement slows down, this is usually not a great sign.

To see their level of interest, you can compare their average diligence time with how quickly you’re moving through their process. Ask questions to know where you stand compared with other in-evaluation businesses.

You want your startup to be among the top deals, so use FOMO, a powerful tool in business, to your advantage.

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