Capital Raising — Considering a raise? Here are 5 things you need to do

Published on
November 3, 2022
Steven Arnold
Chief Design Officer, Partner
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Savvy investors are protective of their money — as they should be. For investors to jump on the opportunity entrepreneurs and founders are presenting to them, they have to be given full access to what is happening behind the scenes.

This means both macro and micro views of business model effectiveness, financial performance, team industry experience, proprietary technology, and market size. And these are just small parts of the entire pie.

With the right team, market opportunity, operating systems, and controls, any entrepreneur can take an idea and turn it into a profitable venture. However, the obstacles business leaders have to go through to raise capital are equal parts exhilarating and intimidating.

Moving from early adopters to the mass market presents a multitude of unavoidable, potentially highly damaging challenges. This is especially true when trying to achieve standout impact in a crowded global market.

To ensure that business leaders attract the capital they need during their most critical stages of growth, and achieve terms that do not endanger their future options, here are five things that need to be taken into consideration.

1) Be Financially Prepared

In order to accelerate towards your goal, you need capital to fuel the enterprise. Raising capital, ironically, also costs money. As interested investors assess if businesses have what it takes to make the gigantic leap and still land on their feet, the time and process drain founders emotionally, mentally, physically, and financially.

Some entrepreneurs need to endure waiting for months or even years before getting a YES. Others wait four to six months before receiving a dreaded no.

This leaves less energy and time to focus on keeping momentum and running the business. Often, this can lead to a poor overall performance, reduced customer service, deficient processes, and ultimately decreased profits.

This spells trouble for young companies trying to bypass the barriers. They can often go bankrupt while their founders scramble to get funding for their next growth phase. While unfortunate, these demands come with the territory of capital raising. If you want to go fast, you have to be able to afford it.

To master this ‘messy middle’, business founders need to develop a ‘fail-safe’ financial plan beforehand and not make the mistake of underestimating costs.

2) Create an Effective Investor Deck

As entrepreneurs, brand experts, marketers, investors, and venture capital partners ourselves, we have built an investor deck formula that consistently delivers. Within the last ten years, we have successfully helped numerous businesses raise over $60 million in series funding by empowering them to go above and beyond expectations. We have three tips to make that happen.

First, an investor deck must stand out from the get-go. Investors are time-scarce and are bombarded with at least 50 to 100 pitches a week. Their team saves them from sifting through each one. So you need to cut through.

To stand out, your investor deck must tell an exciting, well-supported brand story that can keep them engaged from the first page.  

Second, an investor deck, while created mainly for investors, can go beyond the capital raising phase. It should serve as a founding document for the business itself to reference years after scale-up growth undertakings.

Companies should look at their investor decks and have an existential experience. It should provide them with an outside view of their business. A powerful investor deck will allow founders to see all the things they do exceptionally well, as well as areas they need to improve upon.

Finally, an effective investor deck will highlight a perfectly aligned business to brand and marketing strategy. It should utilise existing and possible business opportunities to build on the brand story from the first point. A page-turner for investors from Purpose to Use of Funds

Your deck should validate investors’ unspoken beliefs, ideas, or personal truths. A truly great investor deck should be able to answer lingering questions about the WHATs, HOWs, and WHYs.

If your investor deck ticks these three items, you will not only get to showcase your story and how awesome your company is, but also have greater control of what your message is and how it is delivered. This gives founders the upper hand as they venture further into the investment community.

3) Consider Your Partners’ Experience, Network, and Reputation

When racing to get much-needed capital, every day counts. With limited funds, entrepreneurs do not have the time to get their partners and network up to speed with what the business is all about.

Focusing time, effort, and resources on a few reputable investors who have the relevant industry experience, know-how, and network can expedite the fund-raising process.

4) Don’t Stop with Just One

One devastating mistake entrepreneurs make is concluding their search for funding once they get one investor to sign on. Doing so weakens an entrepreneur’s bargaining power. In the same way you want multiple bidders, you want multiple investors.

A potential investor might sense this weakness and try to sway negotiations toward their favour. This leaves business leaders with few options to forge terms they are comfortable with and can potentially force founders to alter their path or objectives.

To avoid being backed into a corner like this, it is important to always pursue other options — no matter the degree of interest. Thus, increasing the stakes and sense of urgency for keen potential investors and boosting the confidence of the business.

5) Keep Up with the Legal and Accounting Minutiae

When everything is said and done, lawyers and accountants can safely take a step back and reap their just rewards. While entrepreneurs are left to deal with the agreed-upon terms, responsibilities, conditions, covenants, and party rights in the long term.

Remember that professionals, no matter how seasoned and competent, will never fully grasp the impact that terms or conditions can have on any given business.

Every fund-raising deal comes with risks and will most likely set business leaders back more times than they anticipate. This alone should be enough to motivate founders to really dig deep and learn as much as they can.

Founders should not be afraid to do most of the dirty work, whether in regard to out-of-pocket expenses, investor decks, partner backgrounds, or the boring but potentially impactful legalities.

As scale-up specialists, we at BeingIconic have successfully guided entrepreneurs with the trends, processes, and cumbersome details of the fund-raising process. Most importantly, with our vast industry experience, we have assisted scale-up founders in creating investor decks that helped secure millions in additional capital. In fact, the last 25 investor decks we built helped our clients raise over $60 million in series funding. Partner with us today if you want your business to reach your fundraising goals.