If you’re reading this, you’re probably in the process of raising capital for your startup. Congratulations! You’ve already accomplished a lot. But now the real work begins. Raising capital is essential to the growth of any startup, but it can be time-consuming, frustrating, and even soul-crushing at times. But it doesn’t have to be that way. Here are seven tips that will help you raise capital faster and with less stress:

1. Know Your Numbers

One of the most important things you can do when raising capital is to have a firm understanding of your financial situation. This means knowing your burn rate (the rate at which you’re spending money), your runway (the amount of time you have to achieve profitability), and your valuation (the worth of your company). Investors will want to see these numbers before they make any decisions, so it’s important that you’re able to explain them articulately.

Your business plan should include an executive summary, market analysis, competitive analysis, product road map, go-to-market strategy, and financial projections. It should be clear, concise, and convincing. Remember, you only have one chance to make a first impression, so make it a good one!

Create a FAQ document where you will store all your numbers and the most common questions that investors ask.

2. Create a strong pitch deck

Your pitch deck is one of the most important tools you have when it comes to raising capital. This is what you’ll use to convince investors that your company is worth investing in. Therefore, it’s important to put a lot of thought and effort into creating a strong pitch deck that highlights all the reasons why someone should invest in your company. If you’re not sure where to start, there are plenty of resources online that can help you create an effective pitch deck. Make sure to check Guy Kawasaki’s 10-slides pitch deck template. Big market, strong product-market-fit (a product which is “must to have”, not “nice to have” and customers ready to pay for your product), and an experienced team with unique sector insight would be great advantages.

Investors receive hundreds (if not thousands) of pitch decks every year, so it’s important that yours is high quality and stands out from the rest, be sure to also focus on creating visuals that tell a story and highlight key points. Remember, investors are busy people with short attention spans, so make sure your pitch deck is direct, to the point, and visually appealing.

A professional designer could be your best investment during the fundraiaing process, marked sure you hire one to clean up your pitch deck and create a pitch deck that tells a story.

3. Understand Your Target Investor

Before you start reaching out to potential investors, it’s important that you do your homework. This means researching the different types of investors that are out there and finding ones that align with your company’s mission and values. It also means knowing how much money you need to raise and what you’re willing to give up in return for that investment. By doing your homework upfront, you’ll save yourself a lot of time and energy in the long run. Talking to the wrong type of investors really would cost you months, if not years.

Before pitching to investors, it’s also important that you take the time to understand their interests and motivations. What type of companies do they usually invest in? What are their preferred investment stages? What industries are they passionate about? By taking the time to research these questions, you’ll be able to tailor your pitch specifically for them which will increase the likelihood of success and again will save you time by not approaching the wrong type of investors.

Waisting time targeting the wrong investors could be your worse mistake in the entire fundraising process. 

4. Utilize Your Networks

One of the best ways to raise capital quickly is by utilizing your professional networks. Talk to personal connections, former colleagues, or even industry mentors—anyone who might be able to introduce you to potential investors or help facilitate a meeting. The more people you talk to about your fundraising efforts, the better your chances of success will be!

Friends, family and Angel Investors from your network could be great assets for you to grow a business. They often invest in you rather than in business only, but they are usually closer to you to see the growth potential of a project. They join and often take an active part in the development of the company and increase the estimated value to the maximum possible. However, it is not easy to get someone who is risking their own money into unclear ideas. Hence, several key aspects are necessary for successful pitching: the idea, yes, in fact, at least half of the success lies in the idea, namely in its uniqueness and relevance to current realities; the stage of company development at the moment, in other words, the readiness of the product to the consumer; last but not least, the current sales level if any exists. At this stage, everything revolves around the founder’s ability to deliver, discover market fit and raise further funding.

Make sure you track your pipeline of investors, everyone you have contacted so later you can manage follow-ups and investor updates efficiently.

5. Build relationships first

Investors are people too, which means they’re more likely to invest in companies that they have a personal connection with. Therefore, it’s important to build relationships with potential investors before you start pitching them your business idea. Get to know them on a personal level and find out what interests them outside of work. The better the relationship, the higher the likelihood of getting an investment.

Build relationships with investors by including them in your investor updates making prior to your funding round. If you are on your path to, for example, a Series A round you can include Series A  VC funds in your investor updates mailing as soon as one year prior to the round. The best relationships you will build with investors prior to the round, the faster you will close the round when it starts.

To start warming up investors with your monthly investor updates, sign up on Quoroom and target investors who are the best fit for your next funding round. We have seen hundreds of companies utilise investor updates to stand out from the crowd and turn it into their secret weapon in the fundraising process. 

6. Be prepared for rejections

Unfortunately, not every investor is going to say yes to investing in your company. In fact, most will probably say no. It’s important to be prepared for rejections and not take them personally. Just because one investor says, no doesn’t mean that your business isn’t viable or that you’re not good enough. It just means that they didn’t see the same potential in your company as you do. So don’t get discouraged and keep pitching until you find an investor who believes in your vision. 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.

“Be prepared for rejections” actually mean don’t give up in the process. Unfortunately, many companies give up too soon and haven’t yet done their homework required by the fundraiaing process. 

 7 . Follow up and send investor updates

It’s important to follow up with each investor after your meeting, whether they decide to invest or not. Thank them for their time and let them know that you appreciate their interest in your company. If they do decide to invest, make sure you keep them updated on your progress and milestones, so they feel like they’re part of the team and invested (literally) in your success. If they don’t invest, ask for feedback so you can improve your pitch for future meetings or what you have to achieve to get them on board.

If they answered not at the right time, but you do fit their thesis, make sure you send to send out investor updates on at least a monthly basis, better every second week if you are in the capital raising process. Impress them with your growth, traction and other achievements so that, eventually, they will come back to you with more questions and interest. Sending out investor updates shows that you’re professional and courteous, and again it may just be the thing that sets you apart from other companies vying for investment. 

Conclusions

Raising capital is essential for any startup looking to grow, but it can be a daunting task. However, by following these five tips—knowing your numbers inside out; having a solid business plan; targeting the right investors; crafting a compelling pitch deck; utilizing your professional networks—you’ll be well on your way to successfully raising the money you need! Once capital is raised, it is one of the first essential steps for the founder, but one giant leap for business.

Book a free consultation about your funding round. Our team of experts are ready and waiting to partner with you to create a stellar plan that will help you reach your fundraising goals. 

Photo credit to Mathieu Stern