While you might be convinced of the potential of your startup, investors and VCs will need some hard evidence of your success. The first thing you need to remember before doing your first round to raise capital is that in the initial fundraising phase, investors aren’t really investing in an idea or a company; they are investing in the entrepreneur.
Here are the tips that every successful entrepreneur needs to know before raising funds.
- Know your product
Understanding your product’s feature allows you to present its benefits accurately and persuasively. Before meeting your investor, have a well-defined product with a clear strategy and roadmap. Remember that investors are looking for a unique product or service with the ability to disrupt existing players, either worldwide or regionally.
- Research your investor
Do your due diligence on the VC funds. Research what investors are looking for, what companies they’ve already invested in, what is their fund size and ticket of investment.
This will help you identify whether your investor is a suitable fit.
Some of criteria that make a good fit include:
- Synergies either with existing portfolio companies or the fund
- Sector Experience
- Simplify your capitalization table
Keep the shareholding structure as simple as possible – saving space for new investors while keeping a significant stake for the founders.
- Build your team
Investors expect the management team to possess the experience and capabilities to successfully execute the business plan. Build a strong team that can tackle challenges, has the ability to adapt to different situations and will relentlessly aim for success.
- Build relationships
Keep in touch and build a strong relationship with the VC by keeping them updated on your milestones, KPIs and recent developments. Most importantly, be persistent and don’t burn bridges: a VC that might not be able to invest immediately can still be a potential partner in the future.
- Perfect your pitch
Pitching your startup is critical, because at this stage, the investors will decide if they want to dive further into the process. Turn your pitch into a story and present your solution in a clear and concise way. Take the time to put together a pitch deck and super-practice your pitch. Be prepared to back up your claims and have a well-thought-out business plan available to share.
- Choose your mentor(s)
Make sure to find and engage mentors and/or coaches who have enough experience in your sector and who can share their expertise and advice to put you on the right path. Mentors are the secret weapons of successful startups and investors know that.
- Learn from failure
All entrepreneurs face failure. Successful entrepreneurs, however, are the ones who didn’t quit. You don’t need to worry about failure, with hard work and perseverance, success will eventually come to you. As long as you are learning from every mistake, every failure could be to your advantage when you are raising funds.
About the writer
Danny Maalouly is the Investment Manager in Berytech Fund II. He brings over 10 years of experience in financial markets, asset management, and wealth management. Danny holds an Executive MBA from ESCP Europe & ESA Business School, a BBA in Finance from the American University of Beirut, and a certificate in Mergers and Acquisitions from Harvard Business School.
Connect with Danny on twitter @dannymaalouly