What you need to know before you start raising funds

I spoke with Kerty Levy at TechStars a little while back, who illustrated quite how much the fundraising market has shifted. It's worth reading the full article, but here's a couple of examples of how far things have evolved from just a couple of years ago:

“I’ve heard of a pre-seed company going into seed, around $1.5 million,” she said. “They were asked to do a?‘Magic 8 Ball’ analysis, which means parsing out the details of their lifetime value and their growth and everything on a level that I’ve never seen it at this stage before."

For traction, it used to be, ‘Let me show that I’ve got some traction.’ Now it is, ‘How quickly is that traction accumulating? At what rate? And are we seeing it continuing to go? When I talk to you this week, is it different next week?’

The sophistication of startups needing to raise money is higher than ever before, and the hurdles that need to be jumped over to raise money are spectacular.

This week’s Pitch Deck Teardown

This week’s pitch deck teardown looks at the deck Netmaker used to raise a $2.3 million seed round. Netmaker, which lets users create and manage VPN connections without the learning curve, used a 14 slide deck, from which I’ve picked out three things to love and three things that need a bit more love and attention. It takes a deeper look at traction, vision for the future, and the ask slide, among other slides.

3 top fundraising tips

Seeing as this is my first proper newsletter about pitching, we thought that I’d begin at the beginning of the fundraising process and examine three things that you really need to know or think about before you start.

1. Is VC funding for you?: VC funding isn’t the route for every startup. So before setting off on your VC path, you must work out whether it’ll be a yellow brick road to success or a highway to hell. To do that, you need a firm understanding of what VC is and how it works.
2. You're raising for goals, not for runway: It’s easy to think that you need to raise enough money to ‘last you 18 months’. But that’s not what you’re raising money for, not really. You are raising funds in order to reach milestones that will take you through to your next funding round: investors need to see results. So rather than think about how much money you need for a time period, work out how much money you need to achieve a series of specific, measurable, achievable, relevant, and timely goals.?
3. You need a business model: When you’re starting out, it’s about ideas and dreams and hopes. That means it can be tricky to focus on a single business model because there are so many options, and who knows what’s going to work. But your success depends on finding a single, repeatable business model. Maybe you will have to pivot at some point, but you need to give yourself a sound foundation that comes from working through a plan.

If you are raising money for your startup, and you want a private pitch deck review from yours truly, that’s possible! See haje.me/services for more information.