"Who would've thought that we could kick off our third batch in sweat pants? Yesterday…
It is easy to feel overwhelmed when you start looking for an investor for your startup. There are so many websites offering advice on what to do and who to talk to. You could spend weeks reading article after article and still, you wouldn’t know how to approach investors professionally and with confidence.
Our goal with key2investors is to give startup founders everything they need for the whole fundraising preparation process. If you are a founder who wants to convince an investor to give you money, we want to give you everything you need to do so: From the required knowledge to the tools for implementation – all tied together by an easy to follow process so you can be confident ?that you have prepared professionally before you approach investors.
The Fundraising Process: From Strategy to Investment Teaser
What comes to your mind when you think about reaching out to investors? You are probably imagining a well-formulated email with a great presentation deck attached that will make the investor go Wow!. Yes, that would be the ideal scenario. But let’s take a step back before we start celebrating.
Ultimately you will need to create your investment teaser (or teaser deck) for your company that you are going to send out to the investors. This document will explain why your startup is worth investing in. But what should you put in there? That is the hard part and it’s going to require quite a lot of time and effort from your side to get there.
- In our step-by-step guide to fundraising, you will find in-depth information and specific instructions that help you to think about, define and create the necessary things to become ready for approaching investors.
- We have created a couple of tools to calculate valuation ranges.
- We have an investor-readiness checklist that you can use to find out how well prepared you are
The 5 steps to investor-readiness
Below is an overview of the topics that you need to master. Following the steps in our framework will guide you trough the process of making your startup investor-ready.
How well can you answer strategic questions?
You should start by defining your strategy. This will be the basis of all the following steps in your fundraising process. These are some of the topics you should think about:
- What is your market position and how can you protect it?
- How are you going to enter your target markets?
- Can you explain how your product will evolve?
- What does your product roadmap look like?
- What about your past traction? How can you show that there is demand for your product?
- How aligned is your founder team? Does everyone have the same goals?
Does your financial plan convince investors?
Your financial plan explains your way forward in numbers. It is based on your strategy and it should be dynamic (that means if you change an assumption, this change should automatically be reflected in dependent calculations).
Investors are interested foremost in your financial plan because this is where they can make or lose money with your startup. That’s why your financial plan must be really convincing and solid!
Can you explain the valuation of your startup?
There are many valuation methodologies out there that can be used to come up with a value for your startup. It is important for you to understand them properly so you use them in the right way. Valuations are based on a lot of assumptions and contain a lot of uncertainty. Also valuations are not fixed numbers. You can and should discuss with potential investors how you got to the valuation you present. With a a well-argued valuation you will impress potential investors!
How do you find the right investor for your startup?
Investors bring more to your startup than just money. Finding the right investor is crucial. It is important to define good investor profiling criteria. The better your search criteria the higher are your chances of success. Another vital point is how you manage the process of approaching investors well so that you are not caught by dynamics.
- Which documents do you need to prepare and how should they be structured?
- When should you send out which documents?
- How can you make decisions for investors easy?
- Which criteria are important for you to select investors you want to approach?
How do you manage dynamics in negotiations and achieve the best results?
Talking with investors can be hard at the beginning. You might feel surprised by the questions they ask and the dynamics that often arise in negotiations.
The better you are prepared the easier it becomes to deal with difficult situations in investor negotiations.
With our guide, you will quickly learn how you can improve negotiation results and reverse the knowledge-imbalance.