Five Tips For Entrepreneurs Raising A Pre-Seed Round For Their Enterprises While raising a pre-seed round can be overwhelming, it can also be a learning experience to help founders develop critical skills that will benefit them in the long run.
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Fundraising is a crucial part of a startup's journey. Yet, it is also a period of high stress as founders strive to secure the necessary funding to bring their vision to life. While raising a pre-seed round can be overwhelming, it can also be a learning experience to help founders develop critical skills that will benefit them in the long run. Here are five things that we at Sav learned from our own fundraising journey for our US$750,000 pre-seed round:
1. Don't wing it Be prepared. Investors have different perspectives, and they will request varied materials to study before they step in. To streamline the investor onboarding process, we created a comprehensive resource centre that consists of financial models, a data room, letters of intent, contracts, pitch decks, team member profiles, research and reading material, competitor benchmarks, and media coverage. By having all these materials readily available for investors, we reduced the average closure time to half, allowing us to focus on building our business.
2. Cast the net far and wide It is crucial to reach out to as many potential investors as possible. Fundraising can be challenging and time-consuming, especially in the current market conditions. Incubators and accelerators add immense value in the early stages. We applied persistently to accelerators, eventually being accepted into Microsoft GrowthX Accelerators and the Mohammed Bin Rashid Innovation Fund. Make sure to consider friends and family first- having them onboard will give you more perspective, honest feedback, and runway for the first few months.
3. Look beyond the "no" Founders should get used to hearing "no." The funding winter is set, and there will be very few investors who would be keen to take a risk with early-stage startups. It is crucial to knock on as many doors as possible. A "no" from an investor doesn't necessarily mean that your product or idea is substandard. It just means that the investor wasn't the right one for you. In fact, those who immediately say "no" are way better than those who sit on the fence and keep delaying a conclusion to the conversation.
4. Get the money in the bank Getting the term sheet signed is only half the job done. What's next is consistent and aggressive follow-ups with the investors to get the money in the bank. While we were lucky with our existing investors who wired the money almost instantly, we have heard some horror stories of backouts, term changes, and delays in fund transfers. After all, there's nothing better than money in the bank.
5. Take care of yourself Maintaining a positive frame of mind is essential, especially as fundraising can take a toll on your mind and body. Most founders miss their fitness routines while raising funds because it is a super stressful time. However, starting the day well and maintaining your routine is crucial. At the end of the day, having strong body language and confidence helps close the deal faster.
In conclusion, fundraising is a challenging process, but with the right preparation and mindset, it can also be a valuable opportunity for your business to grow and succeed. By being prepared with comprehensive resources, reaching out to as many potential investors as possible, maintaining a positive frame of mind, embracing rejection, and following up consistently, you can increase your chances of securing funding for your startup.
So, if you're currently fundraising or planning to do so in the future, take note of the above five key takeaways, as you'll be better equipped to navigate the fundraising landscape, and achieve your business goals. And remember, it takes persistence and dedication to turn an investment injection into a successful and thriving business. Good luck!