First fundraise? 10 tips you need to know.

TRC 017: Fundraising for the first time? 10 tips you need to know

investment readiness Aug 31, 2023

Read time: 5 mins

We spend a large part of our time with startups advising them about investment readiness.

Outside of getting pitch decks completed, the pitch perfected and due diligence materials ready, these are the top tips that we come back to with founders time and again.

  1. Start before you start: Warm-up long before you formally start raising. The best deals often materialise through relationships built over time. It’s not out of the question that you get investment from cold-sending your deck to a VC, but
  2. Narrative is everything: Can you distill your vision into a compelling story? If you can't explain it succinctly to your Grandma or a five-year-old, keep refining. You need to make people emotional - tell them how you are going to change the world for your customers rather than spending ages explaining your product features. You will be amazed what a difference this can make.
  3. Growth is important, but so are unit economics: Skyrocketing user numbers look great, but savvy investors dig deeper. Know your unit economics inside out. If you aren’t yet profitable on a unitary basis yet, it’s vital to have a very convincing plan of how you will be. Without this, you will just be viewed as a black hole for investor cash.
  4. Raise for Milestones, Not Time: Don't just calculate how much you'll need for the next 18 months and how you will spend it. Think in terms of milestones - what will this money help you achieve? Maybe it's product-market fit, a certain user count, or revenue targets.
  5. Know Your Worth, But Be Prepared to Negotiate: Have a clear valuation in mind based on research and comparable businesses. Yet, understand the balance of power, especially in your early days. Being overly dogmatic without clear evidence for your assertions on valuation can make it a long hard road.
  6. Rejection is a Rite of Passage: Even unicorns faced rejection. Don't get disheartened. Sometimes, a "no" today is a stepping stone to a stronger "yes" tomorrow. Conversion rates are typically in low single figures, so take the learnings and move on.
  7. Due Diligence Works Both Ways: It’s not just you that should be evaluated. Assess your investors - do they bring strategic value? Will they be there in tough times? Search for people they backed where it didn’t work out or where success was hard to come by. It will likely give you a better read on their values.
  8. Fundraising is a Distraction: Yes, it's essential for some businesses. But it can eat into the time you spend on your actual product or growing your sales. Try to balance both and remember what your core focus should be. If you have co-founders, agree who is going to lead on fundraising and who is going to lead on driving the business. Keep close, but don’t duplicate effort.
  9. Transparency Pays Off: Be open about your challenges. The right investor doesn't just bet on your current status but on your potential and ability to overcome obstacles. Getting over the biggest hurdles on the way to success are much easier when you are open enough to ask for an accept help and feedback. No investors believe that everything is perfect all the time, so drop the constant sales mode.
  10. Relationships Beyond Money: After the funds are in, remember that the real journey begins. Foster those investor relationships - you'll need more than just their money. Their network, advice, and experience can be gold.

If you are struggling with getting investor ready, our pitch deck course contains all of the tools you need to build your investment case, not just your pitch deck. You can find it in the link below.


Whenever you're ready...

There are three ways we can help you:

1. Get free actionable advice in your inbox every fortnight.

2. Get 1:1 coaching to help solve your biggest problems.

3. Create a winning pitch deck with our online course. It gives you the insider knowledge we learned building and advising startups that raised over $1bn.

Startup know-how to give you the edge

Subscribe to THE ROLLERCOASTER, our fortnightly newsletter with actionable advice to manage the ups and downs of startup life.

We will never sell your data to anyone.