10 Fundraising Tips to Get Your Startup Started How to steadily grow while reaching those financial goals.
By Olga Fleming Edited by Bill Schulz
Opinions expressed by Entrepreneur contributors are their own.
The global pandemic has disrupted entire industries, but start-ups have been resilient, pivoting their business models and even going public!
In the biggest US IPO of 2020, global home rentals giant Airbnb had a stock market debut that took the firm's valuation to $100 Billion. The current year brought with it an IPO for the dating app that is Bumble, making founder, Whitney Herd, the world's youngest self-made female billionaire.
As investors begin to scan the world for the next set of unicorns, it's time for you, as an entrepreneur, to get your start-up onto their radar and chart your next fundraise.
Related: This Startup Fundraising Platform is Bringing Non-Profits to the World of Venture Investing
Tip 1: Tell your tale
Rethink your pitch deck: Why not build short, personal, engaging videos? Be bold! But remember not to get lost in the details – focus on showing how you're different, your positioning and your team's voice. We're all increasingly bombarded by digital communication from all sides and we've lost our attention spans. If you want to stand out, be able to show the big picture...FAST.
Tip 2: Caring about the community matters
Sustainability is no longer a buzzword. You need to truly care about the impact your brand makes on our planet and you need to show this to your investors. Angels and VCs are looking for returns beyond the financials while thinking in terms of environmental impact, especially when it comes to investors based in Europe or the US. You need to show these endeavors in your pitch decks or you'll lose out to rivals that do, with business models and performance metrics similar to yours.
Tip 3: Stay on top of returns
Start-ups typically have a journey of 5 to 7 years before exit. With higher risks due to unpredictable environments (and because we've all got to make up for financial losses we've incurred during the pandemic), angels and VCs will be strongly concerned with returns in the near future while likely preferring businesses with aggressive growth plans, clear exit strategies and higher Internal Rates of Return or IRRs. Be on top of what makes you unique, pitch your success indicators well and improve your chances of a successful fundraise.
Tip 4: Embrace virtual networking
Virtual meetings are likely to replace physical ones for the foreseeable future (or at least move to a hybrid model), as this helps both entrepreneurs and investors save time, money and prevent risks to health. Join as many relevant platforms as possible and start networking! Join accelerators across countries to learn about different markets. Make the most of your networking to build powerful strategic partnerships and get the best advice.
Tip 5: Build a visible online brand
Investors are increasingly looking for the next billion dollar idea online. Based on your website, will potential investors find you, as a founder and reliable? How impressive is your social media profiles? How large and credible is your network? Is your team trustworthy? Is there a buzz about your work in your target audience community? What is the demonstrated need and feedback for your product? Investors will look for all of this online, so make sure you're putting the right information out there.
Related: SmartKarrot Inc. Announces Extended Angel Round Fundraising Completion To The Tune Of $1 mn
Tip 6: Homeworking before networking
Virtual networking provides more thorough access to all information on a potential start-up for an investor. Make sure you do your research with regards to which investors are likely to be interested in your niche, so that you reach out to the right ones with a structured approach. Remember: Most networking events are free for startups, so make the most of them.
Tip 7: Narrow down investors based on the niche
Unlike pre-pandemic days wherein investors, especially angels, were more open to exploring start-ups across different sectors outside of their core or niche investment area, higher risks and higher compliance now due to increasing transparency in an online world mean that your investor is likely to focus on her area of expertise for higher success. Know specifically what niches potential investors play into.
Tip 8: Think beyond the tax advantage
Many start-ups choose to be based in regions with lower taxes and access to good talent with tiny wage levels. Post-pandemic investor attention has been drawn to regions, such as the UK or Germany, which supported their start-ups in tough times while helping them ride out the wave. Investors are increasingly looking beyond tax efficiencies and at the strength of jurisdictions. Highlight the advantages of where you're based!
Tip 9: Build a global talent pool
The pandemic has normalized virtual work while productivity platforms such as Zoom, Slack and Asana are now ubiquitous. You're now in a position to recruit the best talent globally! Source your human capital internationally. It's easier, faster and often cheaper.
Tip 10: One clear step at a time
As you gear up for fundraising, ensure your priorities are in order. You want to be focussed on your specific goal – at an early stage this is likely to be your minimum viable product or MVP – and want your investors to recognize they're minimizing their risks. Don't get overwhelmed with multiple goals while being aware that an absence of step-by-step management rules can derail your business growth.
Related: 4 Ways to Generate Investor Interest, Even When Funds Are Scarce
