Fundraising Tips & Tricks

During this bearish market, it is not easy to fundraise even on the pre-seed round as most investors (both venture capitalists & their respective limited partners) tend to conserve their cash and only invest in those that have a rather unique and/or great traction.

At GrowthCharger, we’ve been on both sides of the table. Here are some of the tips we’d like to suggest all start-up founders consider. We have split it into three (3) different segments, which are:

• Pre-Fundraising Tips

• During Fundraising Tips, and

• Post-Fundraising Tips

---

Pre-Fundraising Tips:

1. Understand Your Investors

• There are many types of investors (Angel, Venture Capital, GLC, Grant, Corporate Investor, Private Equity)

• Typical VC funds have 2 life cycles, the first is for newcomers and the last is for follow-on existing investments

• Understand who are the investors you’d like to meet

• Do your Due Diligence on them too (check Crunchbase)

• Understand Your Investors

2. Prepare two (2) kinds of presentation/business decks

• Normal presentation deck (fewer words)

  • Generally, it’s about your business, what you're trying to solve, what your products are, your traction (if any), your team, your unfair advantage (if any), competitor x industry performance & potential

  • Tailor to your respective investors

  • There are a lot of free templates out there.

  • P/S: Make it MOBILE FRIENDLY

• Investment Memo (generally much more detailed)

  • This is to help the respective analysts or vice-presidents or partners to prepare their investment committee (also known as “IC meet”).

3. Understand your Industry

• Go in-depth, you’re the domain expert, not them

• Highlight what will you be working on by stages

• P/S calculate your market size but always go from the bottom up

4. Get An Intro

• Do not waste your time by cold-calling investors

  • They receive lots of proposals on a daily basis

• Find an intro, mutual friends, LinkedIn, attend events ETC

  • It’ll bump your startup proposal up the list

5. Fundraising Strategy

• All fundraising & budgeting should be different on stage and on your industry business

• Example below:

During Fundraising Tips:

1. Raise $$ amount vs. Valuation

• Typically 12-24 months (18 is the sweet spot)

• Valuation:

  • Traditional: P/E Ratio or DCF Valuation

  • Tech: Industry Multiples x Growth (%)

• It’s OK to change the amount you want to raise & the valuation along the way

2. Understand Cap Table

• How can your investors/you ‘potentially’ exit?

• Do you have enough for your future superstars?

• How can your investors exit?

• How many shares can they get? vs their dilution