You don't have to fundraise to be successful, but fundraising may help your idea get off the ground or allow you to invest more aggressively into your product or growth. It's a tool to building your company, not the goal.
Raising money comes with increased expectations, added responsibility, and new relationships. This is not an easy thing, as your journey (if done right) will likely to take a decade, managing this throughout those years will take real work. It's also likely that your journey will have its ups and downs, so managing through those hills and valleys will be a challenge to the founder.
With that said, for those who set out to raise money, the following will provide some guidance on raising money.
List of investors by stage
Dilution & Secondaries
Tightly run the process. Run everything in parallel. Set expectations. Set a target timeline. Be in the driver's seat.
- Decide on the high-level schedule / timing of the raise
- Write your narrative and build it into a deck
- Develop your plan, use of proceeds, target raise amount
- List the target investors to talk to, with the firm & partners and why they'd be a good fit. (make sure to avoid people who invested in adjacent/competitors)
- (Ideally) Find warm intros into the partners through your network of existing investors and entrepreneurs that you are close with
- Schedule all the meetings 2-3 weeks out, so that it gives you the ability to meet everyone within 1-2 week timeframe. This will help you build the market& drive demand.
- Have follow-up meetings & full partnership pitches folllowing the initial meeting weeks.
- Control the data room tightly, and align everyone around the same timeline so that you can offer same data points without a lot of customization
- Provide customer references only to the investors who are in the later stage of the process, so that your customers are not overwhelmed with calls and emails
- You also need to do reference checks on your investors -- especially if they will be sitting on the board. Ask for 3-5 founders that you can talk to (yes, you can ask this!) "that didn't just do well, but have struggled quite a bit, or had a dark times" & you also have to backchannel! DO NOT SKIP THIS STEP
- Get your first termsheet, then quickly nudge other investors to get to a quick "yes" or "no". Make sure to be honest, but be respectful not to name drop the firms.
- Identify your ideal investor and negotiate / get them to match or beat your terms in hand.
- Sign the termsheet.
- Run the conformatory due diligence and legal in parallel and get to a close within 2 weeks ideally.
- Only breathe when you see the wires hit your bank account. Nothing is done until then.
- Prepare PR / investor quotes / blog posts / social media posts lined-up as soon as deal is closed.
- Now go build your company.