You are a startup and you have a great idea, in fact, you have found the right business model, you have done tests in the market and you have found the market fit, there is value perceived by customers and profitability; Even if you are selling, getting your company off the ground requires raising capital from venture capital funds with the best possible strategy.
Doing so is a titanic task that deserves attention from you and the founding team. You have probably already faced your first investments, those provided by family or close friends are known as angel investment; however, it has nothing to do with VC funds.
Although they work in the same way in the first instance, in venture capital funds investors offer cash or smart capital in exchange for a shareholding in the company, which complicates the situation as long as you do not prepare to negotiate with them, so that the specialists of G2 Consultores, recommend some strategies that you should take into account to prepare for a round of lifting.
See also: How to Invest Using Other People’s Money
Create a capital-raising strategy, no matter what stage you are in, what your objectives are, the valuation you have, you need to raise capital and for this, planning a correct strategy will allow you to have a greater probability of success since you will go sufficiently prepared with your potential investors with clear goals in hand.
This means that you need to know how you plan to put it into practice, have a very well prepared pitch, a correct valuation, investor prospects with theses that show interest in companies like yours, considering that you will know what and how to negotiate. If you don’t know where to start, ask yourself questions like: why are you raising money? Who are your potential investors? How much capital do you intend to raise? What will the process be? And when do you intend to do it? Not only on that occasion, but in the milestones for your company, which will allow you to have better planning.
- Develop your valuation, approach an expert in case you do not know how to do it. Arriving with an incorrect valuation will lead you to make a bad negotiation, surely the amount you ask for the value of your shares will be incorrect.
- Set goals at specific times. An all too common mistake that many startups make is to raise capital blindly, without knowing what you are going to use it for. How much you ask and in what period is something that you must be very clear about. Your goals must be clear, specific, achievable, and measurable to be effective.
- Research your investors. They will choose you, you must choose them as well. This is a necessary step on your way to raising capital, you should go to the right investors who are interested in projects like yours and who can add the maximum value to projects like yours.
- Decide how much you want to lift. How much do you need to achieve what goals? Plan no more than 18 months, and the resource you need to reach your next bankable milestone.
- Have all the documents that investors ask for ready, if you don’t have much idea of what is requested, investigate with other entrepreneurs, with mentors, or preferably with an expert who will take you by the hand and support you in the preparation of the essential documentation, including a correct valuation, KPI’s, term sheet, financial model, etc).
- Finally, do not forget to adapt your proposal to your listeners, it is important that you do not handle technical languages. Investors are not necessarily experts in the industry you intend to enter.