Create and follow your funding roadmap
by marufjony · 68 things on Twos
- Put together a timeline of how long it will take to raise the capital we need.
- Fundraising will be an important part of the roles we play within the company just like product development.
- Schedules and benchmarks will help us stay on track.
- CEO leads fundraising campaign.
- The first time you approach will be the hardest and the longest.
- Financing is organized in rounds. And the dollar figure attached to it will depend on the stage of our business. And the type of investors we want to pursue.
- Seed round
- Money to grow the seed of your business until it becomes viable.
- Cover your expenses to hit milestones for next 12-18 months.
- Turn demo into a workable iteration
- Hire a key team member
- Grow your customer base beyond those signed up for our service.
- Seed can be $10k - 750k
- Top range is only for biotech and medical sales. Complicated businesses.
- Usually approaching angels specializing in seed funding
- May offer us convertible notes for future equity
- Rather than asking for equity upfront
- Because the amounts are small
- It may only take 1-2 meetings before reaching an offer.
- Since we are pre-revenue, our company will be based on our story, the ability to communicate the vision, and the team we have in place.
- We can expect to hear A LOT of no’s.
- So it’s a great place to test out our story and refine our vision to when we get told no.
- Betting on you more than your business as we continue to develop our product or our business.
- Because they understand a lot of pivots will come.
- Growth X
- Not just looking for home runs, but grand slams
- 3x cash on cash returns
- Angel Round
- $500k - 1M
- Quite possible you will need multiple investors to reach this goal.
- But if we used the seed stage money to reach our milestones. More investors will be willing to take on your opportunity.
- We can also talk to our seed stage investor about whether they have follow on connections for future investments.
- This time using equity instead of a convertible note also known as a safe.
- 75.9% of investors made at least one follow on investment.
- 49.4% of angels have made 3 or more.
- Angels, angel syndicates, angel groups, some VCs
- Will take 6-8 months
- They need to get to know you, like you, and trust you.
- Reviewed along with dozens of others.
- Support to prove their ideas and get up and running.
- Series A
- Concepts proven, ideas validated.
- Investors less likely to support experiments
- Working product, expanding customer base
- Profitability if it all possible
- On the path to acquisition or IPO
- $2-5M
- VCs, corporate VCs, family offices
- Still ask back your other investors
- Capital we are requesting allows us to be acquired or go public in the next 5-7 years
- Can take a while to get in front of a VC
- In order to make 10 investments. They review 1,200 companies.
- You will hear no frequently
- Learn all lessons you can and move on to the next meeting
- Traction, good financials, good story
- We will need a champion
- This will be a thorough process
- If one VC turns you down, others will hear about it.
- If someone says no, figure out why and address it before moving on to the next round.
- Know when to stop
- Easy to get caught up in the process
- Put the money to work before you go back and raise any more
- Avoid traunched investments
- Suggest a convertible note instead
- Don’t reject an acceptable offer
- Don’t assume that once we have an investor offer, that everything is done.
- Deals fall through at every stage
- Keep building your company