Congratulations! Becoming a founder is a huge accomplishment. It’s a difficult journey, but a very rewarding one all the same. As you start building your startup, there’s a lot of new processes that you’re going to be thrown into.
Starting with fundraising, this includes pitching investors, completing due diligence, and negotiating your round. I know that sounds overwhelming, but don’t worry, we’ll walk you through each step.
Let’s talk about pitching first. Nailing your pitch is one of the most important things you’re going to learn as a founder. It’s how you’re going to raise funds, pull in investors and eventually fill out your board. Now, when it comes to pitching, a lot of advice people give you focuses on pitch decks. They promise that they’ve found you the perfect template that will close a multi-million dollar round. But that’s not the advice I’m going to give you. Because, simply put, I think that’s the least important part of your pitch. Instead, let’s break your pitch down into three important aspects: who you’re pitching, what you’re pitching, and why you’re pitching. The ‘who’ is your investors, yes, but it’s important to research beyond that. Take the time to dig a little deeper into each investor and how they operate. Next, the ‘what’. This is all about knowing your numbers. Be able to explain, in detail, every step of your financial model. Finally, the ‘why’. This is your story, your reason for founding your startup. Now’s your chance to win the investors over with a captivating and well thought out story. If you’re looking for a more in depth analysis of each of these stages, follow us on LinkedIn for our upcoming video series on ‘How To Land Your Pitch’.
After a successful pitch, an investor is going to ask you to complete due diligence. With your pitch, you’ve won the investor over with your story, now is the time to show them that you’re prepared to actually run the business. This starts with your data room. It can include a range of documents, but most common are your financial statements, business plans, and product roadmaps. The tricky thing about a data room, is that there’s no set standard for how the information needs to be compiled together. A messy data room, well, that tells investors that you’re not as serious, and may not be ready to get your startup off the ground. But a clean data room? That portrays confidence, work ethic, and preparedness to the investor. If you want more information on what should be included in your data room, or are worried that yours may be a bit messy, check out this detailed guide we created so you can be confident in what you give to your potential investors.
Once you’ve completed due diligence, you’ve made it the last part of the fundraising process; the negotiation. You’ll most likely be discussing your terms all throughout this process, so this part is largely just about nailing down those final details. It may be helpful to determine what terms you are and are not willing to negotiate before you even get to this stage. That way, you’re not compromising on anything too important just because you can feel the process coming to a close.
It’s exciting to be starting your journey as a founder, but it can also be an extremely stressful time. En Verite wants you to be set up for success, so we have decided to start a video series to easily break down complex topics for founders and investors. Our first videos will dive even deeper into each of these stages of the fundraising process; the pitch, due diligence, and negotiation. Make sure you follow us on LinkedIN and are subscribed to our Youtube channel so that you’re prepared for everything that startup life will throw at you.
