How can startups prepare for future funding rounds and maintain their valuation?

To safeguard your start-up's valuation for upcoming funding, focus on core strategies. Craft a growth story backed by solid metrics and transparent communication to attract investors. Emphasise diverse revenue and prudent spending to show sustainability and scalability. Ensure legal and financial diligence to back up your valuation with certainty. Stay agile, know your market, and own your worth.

For SaaS companies like mine, the valuation is a bit simpler because you can go off your revenue and month over month value. A company’s value can be based on its current and projected revenue. Common approaches include calculating a multiple of annual recurring revenue (ARR), monthly recurring revenue (MRR), or total contract value (TCV). Things like the cost of customer acquisition and total lifetime value, customer retention and churn rate will all be very important factors when evaluating your companies worth. Be prepared by knowing all these metrics.

'Ask for money - get advice. Ask for advice - get money.' One of the foundational rules behind relationship building is thinking long-term, which means when you reach out to potential investors (Angel Investors/ Exited Founders/ Industry Experts/ VCs) you should open with an invitation to have a conversation ('What advice would you give to...', 'Seeing you have built a B2B enterprise business too...'), rather than asking for investment straight away.

Working in the world of Family Offices is one that takes expert relationship building skills. These relationships take time and evolve through continued trust building. I find that offering something of value with no request in return is a great place to start. Often I do this through helpful introductions or customizing targeted packages that would help a family office with their goals. The family office sector is growing at an incredible pace so now is the time to start planting the relationship seeds and Bour Turing them in the years to come so you will be well positioned.

There’s a joke in business that whatever you are building to plan 2x the cost and time it will take. It is a good approach to make sure your forecast accounts for extra time and money as life tends to always throw curveballs. I’ve found it really helpful to grow slowly at first to ensure my processes are built on solid foundations and that the customer demand warrants future development. The success of my company has been able to self fund future developments but in the case of a client who needs fast growth and outside investment, make sure the growth trajectory and plan for funds is clearly mapped.

How many times did I heard "It depends" or "I can adjust". I know you have some degree of flexibility. But if you cannot give me a clear answer on how much you want to raise, with what schedule (asap is not a schedule) and are unclear on the why, the chance of the fundraising discussion being over are high. Test your pitch with someone in your network. Get advisors and have them support you (they don't need to be fundraising advisors, management advisors can do it too). Unplanned things will happen during the presentation. But it should not be on the first few basic questions. If you fail to plan, you are planning to fail.

Arguably, the best time to get money is when you closed your round: “We just closed the round, and it gives us an 18 months runway even without any client revenues coming in. So we anticipate we will be raising again at the end of next year, at a valuation of double of what we are currently. But, for the right party, we would be happy to open an extension to the current round to enter right now” Big change in narrative = more conversations on the table, and this is why you should stay in the fundraising mode even after you close your round ??

Set the amount you are raising carefully to ensure you can fill the whole round and keep the momentum going. To do that, you need to know (i) what next major milestone is the funding going to help you arrive at (e.g. launch, ￡1M ARR mark, 1M users mark, international expansion to a key market, introducing a new revenue stream, new product line etc), (ii) how much money you need to cover your monthly burn rate (assuming no revenues) to safely get there, and (iii) in what time you can realistically achieve that (runway). Raising too much can prove challenging if you won’t be able to outline the above 3.