Ask anybody who has tried to raise funds for an early-stage company and every single person is likely to agree on the following.
Fundraising is hard, time-consuming, massively unpredictable and sometimes baffling.
Angels, High Net Worth Individuals, Private Investors, call them what you like, this pool of capital is the bedrock of the venture capital ecosystem and if you are at an early stage, this is who you need to target. Most Banks and Venture Capital institutions will not look at you until you have a certain level of sales or significantly protected IP before writing a cheque. Angel Investors can move quickly, back your idea earlier and provide experience and counsel at the embryonic stage.
I’m going to use this piece to briefly give five tips on how to navigate the fundraising process, taking a tour of what is needed for Angels and VCs alike.
At Acceleris, we have been advising early-stage enterprises on fundraising for 20 years and have a global network of angel and institutional investors. Our FCA regulated status allows us to structure deals that are appropriate for company growth and ensures that our investors have access to quality deals. Across these 20 years, we have learnt the following tips to ensure a successful fundraise.
I have kept this very concise, if you have any questions, please do get in touch;
Prepare!
Unfortunately, most companies that I come across have been forced into fundraising. Cash is tight and the runway is getting ever closer. Fundraising needs to be respected alongside your other business goals when running an early stage company with ambitions of growth.
You need to be focused, motivated and detailed with your preparation for a fundraise, so that all areas are covered for the multi-faceted questions from interested investors.
A successful fundraise is a result of business success, ensure you achieve your stated milestones and are progressing consistently month on month.
If you have existing investors on your cap table, keep them informed regularly. This will make the start of the fundraise journey far easier and having firm commitments from your existing investors goes a long way to putting a new investors’ mind at ease.
The key items required before kicking off is your investment pitch, your business plan and backup data and your investor target list. Make sure your pitch resonates, is easy to understand and presents an exciting vision. Ensure your back up data supports your pitch but also includes company and corporate information, evidence of your sales pipeline and has up to date financial performance. Your investor target list will take longer than you think, ensure you target relevant investors for your sector, stage and ambition.
Network, network and network!
Most founders are not lucky enough to have access to a wide group of high net worth investors or friends who can provide a long-list of warm introductions to VCs.
However, don’t be dismayed, the startup ecosystem is friendly and provides a wide range of opportunities to get in front of investors or advisors who may just know someone relevant. TheEnterprise Investment Scheme Association, the UK Business Angels Association and Regional networking societies (Pro-Manchester for example) are a great resource.
Make the effort to get out of your comfort zone, speak to as many people as you can because the more who know about your business the better.
High Quality Follow-Up
You’re prepped, you’ve networked, and you’ve sent your materials to a list of investors. Now the fun bit.
First of all, you need to set expectations - you will not get responses straight away, you probably won’t get responses from the majority of the list.
Don’t get disheartened, just make sure you follow-up with useful messages. Don’t just follow-up referring to a previous email, send a quick progress update on your business or the fundraise.Demonstrating progress and momentum is better than sending the same pitch deck over and over.
When asked for more information, respond as efficiently as you can with detailed, accurate information. This goes back to the supporting data I mention in the prepare phase and if you have prepared ahead of time, this part becomes far easier.
Completion
The process is only done when the money is in the bank. Work promptly and efficiently to get through the due diligence and legal process, utilise your advisors carefully and keep on top of them to ensure the process moves efficiently. Ensure you are up to speed on all of the documentation, ensure you know what everything means on a term sheet and make sure you protect your early investors who took early risk.
Celebrate
When you’ve completed make sure you have a proper celebration and have a few days off. That is very important as the hard work starts now!
