Fundraising: how to successfully finance your business

Raising capital can be the toughest part of any start-up. The competition for funds is fierce. So, leave nothing to chance. Here are a few tips to secure investors and succeed in your fundraising.

Time is money

Managing time is certainly the cornerstone of any successful fundraising operation. First and foremost, practising patience is essential in fundraising. Finding investors and earning their trust in funding your company takes on average six to nine months. So, you’ll have to spend most of your time, energy, and efforts in developing strategies to attract funds.

Before you dedicate hours preparing slides for a specific investor, travel to a VC, or rearrange your schedules for a meeting, get in touch with your potential investor on LinkedIn to understand their interests.

Make a fundraising pitch

First thing first: no pitch is static. It evolves based on who you’re talking to, where you are and what you need. So, you should have a one-minute version, a 15-minute version, an hour-long version. On top of that, your pitch has to accommodate constant changes. Every day, you’ll have a broader view of your market, new people with new ideas. So, your pitch has to be dynamic.

You need to take investors on a journey. This means having a narrative structure with a beginning, middle and end. In practice, you might need to introduce each part of your speech. So feel free to say: “I am going to talk about the product; I am going to talk about I am going to talk about our team and potential competitors, etc.”.

Finally, any good pitch needs to sound natural to trigger emotions. Cut jargon and buzzwords. Be personal. Use the active voice. Energise your speech with verbs, rather than nouns. And practice your body language.

Tap into new networks

Once you’ve developed your pitch, tap into the local network of angel investors using dedicated LinkedIn groups or get in touch with specialised bloggers. You might also need to join an accelerator programme or attend events and conferences to make a demo.

Be realistic on the funding

For any start-up, raising funds should not take place too early or too late. The amount of capital shouldn’t be too high to avoid diluting the existing shareholding. Similarly, as you might be in rush to get funds, patience is key again. Keep in mind that investors are reluctant to bring fund under pressure.

It is also necessary to find the right level of this fundraising and above all to choose the financial partner that has the right connections to open new doors.

Also, when raising less than EUR 500,000, which usually happens at the start-up phase of a company, you need very few funds. Between EUR 200,000 and EUR 400,000, we recommend activating a network of business angels who invest more commonly at this stage.

Watch the shareholders’ agreement

Shareholders’ agreement must be well negotiated since investors will be part of your company. The terms of the preferential shares may be just as important as the valuation itself. For example, preferential liquidation shares protect the investor and even guarantee, in some cases, a return on investment. The negotiation of input valorisation must, therefore, be understood within a broader framework, including the various clauses of the agreement and any clauses relating to compliance and dilution, in particular, the management package.

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