Strategies for Successful Fundraising

Funding is a major challenge for startups, especially if you do not have a track record of success or generating revenue. That said, we’ve helped dozens of startups in the pre-seed, seed, and Series A funding stages acquire funding and have condensed our process into a few actionable strategies for successful startup funding. 

Understand Your Startup Funding Options 

You can raise money for your startup in several ways:

• Personal savings 
• Friends and family 
• Personal or business loans 
• Angel investors 
• Venture capitalists 
• Crowdfunding 
• Grants 
• Startup incubators and accelerators 

These funding options have varying requirements, advantages, and disadvantages that you must understand to determine how they align with your vision for the company. 

You should also familiarize yourself with the startup funding rounds and their purposes. Here’s a brief breakdown of early-stage startup funding rounds:

• Pre-seed funding is designed to get the startup off the ground. Money raised from this funding round is used to set up the company, conduct market research, and develop the product (MVP). Best for companies valued between $50,000 and $500,000
• Seed funding is designed for early-stage startup growth. It seeks to fund activities like product research and audience building. Best for companies valued at $500,000 to $5 million
• Series A funding targets acquiring funds for long-term company growth through expanding product offerings and acquiring more customers. Best for startups valued at $5 million to $15 million 
• Series B funding is designed to help companies scale even further. It focuses on expanding operations, hiring more team members, increasing market share, and growing revenue. Typically, startups at this stage have established business models and consistent revenue streams. Best for startups valued between $15 million and $30 million.

Beyond Series B, there are also Series C, D, and even E rounds. These rounds are typically for mature companies looking to expand globally, launch new products, or prepare for an acquisition or IPO. 

Understand Your Startup Valuation 

Investors need to understand the potential return on investment before signing a check. Before you start fundraising for your startup, familiarize yourself with valuation strategies for early-stage startups. In most cases, this valuation will involve assessing the performance of similar companies, the product, the competitive environment, and other variables like your experience as a founder and the strength of your team. 

Here are the common valuation methods for early-stage startups:

• The venture capital method 
• The Discounted cash flow (DCF) method
• The market multiples method

Connect With the Right Investors

Alignment with the right investors is key to raising the funding your startup needs. Different types of investors, including angel investors and venture capitalists, often prefer to invest in industries in which they have expertise. Investors are not important simply for the funding they provide. 

They also bring extensive industry and functional expertise that increases the chances of your startup succeeding. Their industry expertise also means they have access to a network of other investors or professionals who could help drive your startup forward. Often, investors become key players in the start-ups they fund as advisors and mentors to founders. 

You can find and connect with investors through your existing personal and professional networks, online platforms like Crunchbase and AngelList, and industry events, or outsource your search for investors to FundsFinders. We can provide you access to our database that has +150,000 contact information of worldwide business angels, private equity firms and VCs.

Prepare an Impressive Pitch Deck 

Most early-stage startups fail to secure funding due to a weak pitch deck. Your pitch deck should communicate quickly and effectively what your startup is about. An impressive pitch deck contains a strong message, good design, and imagery to deliver a compelling message to investors. 

You should prepare an impactful pitch deck for each funding round as follows:

• For the pre-seed funding round, include your company’s value proposition, business plan, problem and solution, potential market size, product (or product mockup), market validation, and business model and strategy. 
• For the seed round, include metrics about your product’s performance, revenue, product development milestones, growth plans, your team, timing market entry, etc. 

Although a pitch is a short document, getting it right the first time will save you the frustration of missing out on funding opportunities. Funds Finders helps you through this process by connecting you with our pitch deck experts, who will help you develop an impressive pitch deck to impress investors and secure funding. 

Frequently Asked Questions 

• Should I fundraise for my startup?

Yes. While you can bootstrap your startup and succeed, fundraising can help you fast-track your startup success by providing you with the capital to develop your products, market them, and deal with business expenses. 

• How do I go about fundraising for my startup?

Start by understanding your funding options, their advantages, risks, and alignment with your company’s goals and vision. Next, develop a sound business plan, financial projections, and a pitch deck to present to potential investors. Finally, approach potential investors to seek funding. 

• How do I find investors for my startups?

The best investors are preferably in your industry. You can find them at industry events, conferences, and networking events. Alternatively, you can work with a startup consultancy to help you access their network of investors.