3 THINGS TO CONSIDER WHEN PREPARING TO RAISE CAPITAL FOR YOUR STARTUP
By Josh Sharma from #CorporateAdvice
On Tuesday night, Ronen Heine, our founder, and Rachel Yang from Giant Leap Impact Investment Group, led 10 entrepreneurs through an investment workshop at Academy Xi. The workshop worked through the process of investment, including topics around what to expect, dilution and common investor questions, whilst also providing skills and resources to help each of the startups get a foot in the door when going down the investment pathway.
See below for some wisdom that I plucked from the session:
- Treat investment like a sales process
The process is not easy. Investment is often described as a full time job — and both Ronen and Rachel recommended that you treat it as such. When raising funds, Ronen recommended the following to ensure your success:
a) Do your research — make sure you thoroughly research who your target investors are and what kind of startups they invest in. Both Rachel and Ronen recommended steering clear of the ‘spray and pray’ approach. Investors receive 100s of requests each year, so spending the time to make sure that you stand out and personalise each type of communication will help you secure the funds you are looking for.
b) Create a funnel — Use products like Trello to create an investment funnel to help record the process of raising money. At the top of the investment funnel, think about writing out your entire list of ‘target investors’, and clearly define key metrics that would indicate an investor has moved down the funnel. In creating a funnel with related metrics, you give yourself a better chance at success by making yourself accountable at each step of the investment process.
c) Record the process — Record items such as who you have contacted, what date you contacted them, what was said in any conversations or emails. Ronen noted that it’s easy to forget the exact content of conversations with individual people, so having a way to record this is essential to a startup’s success.
2. Make sure you follow up
Rachel stressed that if you want to remain front of mind, you should follow up with extra information to each investor that expresses interest in your business. This can demonstrate to an investor that a business is gaining traction and instills a vote of confidence in the founders themselves. One way of doing this is by producing periodic investor updates. These updates should include information about the milestones you have recently achieved, product updates such as new version releases and key customers that are using your product.
3. Treat Investors as a part of your team
It is crucial to consider your investors as a part of your team. Despite the process of investment where an investor and a startup can seem as though they are on opposing sides, both parties share the same vision of success. More importantly, it is key to note that investors want all startups to do well! So, in order to ensure that founders continue building great businesses, investors want founders to grow and develop, and Rachel noted that many investors are willing to go the extra mile to help do this.
Ronen recommended treating each investor as a partner long before the negotiation is finalised. Ask for and follow the advice of trusted investors — they each have pearls of wisdom to share and will willingly do so to help startups grow.
It was great to see so many founders excited to learn about investment and I can’t wait to see how each of them are progressing in the coming year. Thank you to Rachel Yang for helping us deliver this workshop!