Once a startup has arrived at the point where it can consistently earn revenue and has achieved a good product fit in the market, the next step is to raise Series A funding. But sometimes, it can be challenging to know the best way to do it. How should investors be pitched? What would be a good fit for their portfolio? What will their involvement be?
It is a nebulous process, so here are some tips from a venture capitalist who has been involved in the process.
Know the Market
One of the biggest things that venture capitalists tend to look for is the startup’s market opportunity. If a startup is playing in a market space that has a high earnings potential, then the amount of funding will match that. Keen awareness of future customers can help startups to present an actionable business plan to VCs to secure the proper amount of funding.
Build a Strong Team
When venture capitalists are looking at providing funding for startups, the business model is very important, but the people running the show are even more important. By highlighting the people involved and the skills they bring to their business, startups can ensure the proper amount of funding by being true to themselves. Honesty in their work and their passion will help guide the funding decisions by the venture capitalists, letting them invest their money with people they can trust.
Practice the Pitch
The pitch for Series A funding can be quite nerve-wracking, so practicing it repeatedly will calm any nerves in the big moment. Attaining funding is an important milestone in a startup’s life, but preparing thoroughly will remove any unknowns that can derail the process. Honesty is the best policy, as the seasoned professionals listening can sniff out inconsistencies and discrepancies between what is being presented and what the startup is doing.
Pitch the Whole Firm
Some startups only give their full attention to the firms’ partners and directors, ignoring the less senior associates. Everyone at the VC firm will be involved in the decision-making process, so acknowledging every person in the room is important to secure funding for a growing startup.