Running a successful fundraising campaign is no easy task. It takes a lot of hard work, dedication, and organization. If you’re looking to streamline the process and make it easier on yourself, check out these 9 steps!

1. Defining Your Funding Stage

When fundraising, it’s important to target the right type of investors depending on your funding stage. Seed investors are typically angel investors or venture funds who invest in very early-stage companies with high potential. They’re looking for businesses with sound strategy and a team that can execute it. Later-stage investors, such as private equity or hedge funds, invest in businesses that have already proven themselves and are ready for geographical expansion and need larger rounds of funding for that. They’re usually looking for a return on their investment within a few years rather than a decade. Knowing your funding stage and who you’re trying to attract is essential in fundraising.

Investors have different requirements for revenues depending on the funding stage. 

Pre-seed investors are usually looking to invest in pre-revenue startups with MVP and early user traction. 

Seed investors are typically looking for businesses that have large market potential, a solid team and a strategy. They want to see some revenues around $5-20K MRR, but they don’t require businesses to have high revenues yet. They do want to see a product-market fit, growth of 30-40% MRR  and a clear path to scaling. 

Series A  investors are looking to businesses with $1M ARR, or significant growth of a minimum 30% MRR, to achieve $1M ARR within the next couple of months.

Later-stage investors, such as private equity or hedge funds, are looking for businesses that are already generating significant revenue. They want to see a return on their investment within a few years, so businesses with high revenues are more attractive to them. Knowing your funding stage and who you’re trying to attract is essential in fundraising.

2. Identifying Your Potential Investors

You need to identify the best investors for your company based on their investment thesis and reach out to them individually. This can be done through various methods such as online databases, networking events, or even cold calling/emailing. It’s important to tailor your pitch specifically to each investor and understand their individual requirements. By targeting the right investors and reaching out to them individually, you increase your chances of securing funding successfully.

There are lots of ways to find potential investors, but here are some tips:

• Use an online database or directory of investors like Gust, Crunchbase AngelList or OpenVC
• Research which firms invest in your industry or sector and, most importantly, at your stage of business
• Attend industry events and meetups to network with potential investors
• Cold emailing potential investors (but be sure to personalize the email and make it relevant to their interests)

Once you’ve identified some potential investors, it’s important to do your research on them so you can tailor your pitch accordingly. Knowing what they’re interested in and what they’ve invested in before will help you make the most persuasive case possible.

Statistics show that you need to contact roughly 30-60 VCs to get 12-25 meetings and 200-250 angel investors to get 80-100 meetings (approximately 40% of contacted people) to end up with 1-2 VCs and 6-8 angels investing in your funding round.

3. Crafting the Perfect Pitch Deck

In order to secure funding, you need to craft a perfect pitch deck. This is a presentation that will convince investors to invest in your company. It should be well-organized, concise, and persuasive. Most importantly, it should highlight the potential of your business to grow exponentially and expand to global markets, demonstrate your go-to-market strategy and how exactly you plan to achieve success.

There are many resources online that can help you create a pitch deck. Here are some tips to get you started:

• Start by creating an outline of your presentation and decide on the key points you want to make
• Make sure your deck is well-organized and easy to follow, craft it as you are telling a story
• Keep it concise – no more than 15 slides, ideally 12
• Highlight the high potential of your business: experienced team with unique industry insight, large global market, strong product-market-fit by showing positive client/user testimonials and month-to-month or quarter-to-quarter revenue growth.

By following these tips, you’ll create a pitch deck that will impress any investor.

Hire a professional designer to improve the visuals and make the deck easy to read. It could be your best investment to create a pitch deck that will have investors clamoring to invest in your company. Use Quoroom software to upload your pitch deck and keep track of who has viewed it and how long time they have spent.

4. Managing Investor Pipeline

Fundraising is all about building relationships with potential investors and managing their expectations. This involves maintaining a pipeline of potential investors and keeping track of their interests and requirements. It’s important to be organized and keep track of all the data related to each investor so that you can make the best case possible for fundraising. A dedicated Investor CRM, e.g. Quoroom can be a helpful tool for managing your investor pipeline.

By keeping track of potential investors and their interests and requirements, you can make the best case possible for your company. It’s important to be organized and keep track of all the data related to each investor so that you can update investors with the most relevant information and never lose track of anyone you contacted on this and previous rounds.

When you send our cold emails, don’t write a general subject like “Investment opportunity” or “Investment proposal” – write something more tangible about your business, for example, “Legaltech SaaS – +40% MoM – UK – Seed” or “Enterprise Fintech – 1 exited founder – US – Pre-Seed”. The email subject line should be no more than 60 characters, and your email body should be no more than 1000 characters, make sure your email body has bullet points with growth highlights, include numbers, no long paragraphs, and be precise to the point about what you do in easy words, include a link to your pitch deck. Do not apologise for sending the email, and do not approach funds that aren’t relevant. Do not send emails in bulk, personal emails; this is not a numbers game. Personalised emails will get you 80% conversion, while bulk emails will get you conversion 1% and very often closer to 0.

5. Following up with Investor Updates

It’s important to keep potential investors updated on the progress of your company, and one way to do that is through regular email updates. This can be done through email or by a link to a separate document. By keeping potential investors informed of your progress, you maintain their interest in funding your company and creating momentum.

It’s also important to share relevant metrics with potential investors. This data can help them see how your company is performing and how it’s progressing towards its goals. By sharing this information, you’re demonstrating that you’re a competent and trustworthy business that’s worth investing in.

6. Negotiating investment terms

Once you get the interest from key investors, it’s important to negotiate the best investment terms possible. This involves negotiating the amount of money you’ll receive, the percentage of the company you give up in exchange for money, as well as the terms and conditions of the investment. It’s important to be prepared for these negotiations and understand what you’re worth.

There are a few things to keep in mind when negotiating investment terms:

• Know your value – be sure to have data to back up your claims
• Stay confident, and don’t accept less than you deserve while adequately evaluating your stage and position on the market
• Don’t be afraid to walk away if the offer isn’t right and if you have or believe in having other options

By keeping these tips in mind, you’ll be able to negotiate investment terms that are beneficial for your company.

Preferred shares are a type of security that offer investors certain benefits, such as priority when it comes to receiving proceeds from a sale of a company or assets in the event of bankruptcy. They also usually have voting rights, which means that investors with preferred shares have a say in how the company is run. This can be beneficial for companies who are fundraising, as it gives potential investors assurance that their interests will be taken into account.

You need to be careful with issuing preferred shares with participation right, this is a rather greedy practice of investors, and you should be avoided it if possible.

7. Creating a Data Room

Managing due diligence is an important part of fundraising, as it helps ensure that your company is being evaluated fairly by potential investors. This involves gathering all the relevant information about your company and making it available to potential investors. By doing this, you’re able to demonstrate that your company is worth investing in and that you’re taking steps to protect its investment.

Due Diligence can be made easier by creating a data room, which is a dedicated online space where you can store all the information about the company. This can include things like founders’ agreements, employee option agreements, accounts of the company, financials etc.

A data room can be an extremely useful tool for fundraising, as it allows you to keep track of all the relevant information in one place and track who has visited your documents and folders. It also makes it easy for investors to access the information they need, so they can make an informed decision about whether or not to invest in your company much faster. By creating a data room, you’ll make the fundraising process simpler and more efficient for everyone involved.

8. Closing the Deal

Once you’ve found interested investors and negotiated the best possible terms, it’s time to sign the deal and officially receive funding for your company. This can be an exciting but nerve-wracking process, as you’re putting your company’s future in the hands of others. However, if you’ve done your due diligence and chosen wisely, there’s no reason to worry. 

As you are aligned with investors on terms, you can proceed to sign an agreement, you can utilise the Quoroom template or upload the agreement provided by investor lawyers, collaborate to finalise wording and sign.

When signing a deal with investors, there are a few things you’ll need to keep in mind:

• Make sure that all the details are spelt out clearly in the agreement, and have your lawyer read it
• Get everything in writing – make sure that all agreements are put into writing and signed by all parties involved
• Don’t be afraid to ask for help – if you don’t understand something or need clarification on any aspect of the deal, don’t hesitate to ask the investor and their lawyers for an explanation. 

By following these tips, you’ll ensure that the fundraising process goes as smoothly as possible.

9. Post-completion compliance

It’s important to make sure that you’re aware of all the post-completion compliance requirements. This includes things like registering the investment with the SEC, issuing new shares etc. Failing to comply with these requirements can lead to serious consequences, so it’s crucial to ensure you’re fully prepared before signing any agreements.

The good news is that most of these requirements are fairly straightforward and easy to comply with. By taking the time to educate yourself about them and putting in place a plan for compliance, you’ll be able to rest assured that your company is fully compliant and protected from any potential problems.

A few steps are required after closing a deal with investors:

• Signing board resolution with the decision to issue new shares
• Signing and sharing share certificates with investors
• Submitting an SH01 Return of allotment form in the UK or filing under the US federal and state requirements, e.g. Certificate of Amendment for giving to the Secretary of State of Delaware
• Registering the investment with the SEC, e.g Form D (required for companies selling shares to US investors)

Fundraising can be a daunting process, but by following these tips, you’ll make it simpler and more efficient for everyone involved. By taking the time to create a data room and ensuring that you’re aware of all the post-completion compliance requirements, you’ll protect your company from any potential problems and close your funding round faster.

Following these 9 steps will not only make your fundraising process easier, but it will also increase your chances of success. Remember, a successful campaign is all about organised processes and dedication. If you’re feeling overwhelmed, reach out to us and book a free consultation. Our team of experts can help you streamline the process and make sure you’re on track to hit your funding goals.

Photo credit  Lala Azizli