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Fundraising- How to Run a Tight Early Stage Fundraising Process

This article is written by Munira Hussein, a Contributor Author at Startup Istanbul.

The Preparation Process

Arjun Arora is a partner at 500Startups among other things. He has a vast understanding of fundraising for companies. He has directly or indirectly contributed to fundraising for thousands of businesses. He shares his insights. Just like most things, there is a science and art to fundraising. The crucial part in fundraising lies in the preparation. The right preparation gets you excellent outcome.

Major keys

Spend a lot of time in the preparation stage. Put things together initially for a smooth flow of the events that precede preparation.  and then run a tight process. Doing a haphazard work can cause a lot of destruction. Imagine a poorly planned fundraising? It will appear as if you are not serious about what you are pursuing and might damage the company’s reputation.

During preparation, delegate the business side of your responsibilities and focus 100% on the fundraising process. When you are doing one thing here and another there, it divides your attention and you might miss out on the vital stages of preparation. Remember, the capital is needed to keep the company afloat as well as propel it to its vision. spending time on preparing fan impeccable fundraiser is at this stage as important as running the business. Ensure you have a reliable team that can work with minimal or no supervision. You can also leave a capable person that you trust, in charge.

Create a momentum by going deep first and then broad. Begin with your closest networks who make up your first degree relationships. Then use their networks to get to the investors you need, who will be your second degree relationships.

Using the network of investors that you have, create the fear of missing out (FOMO) among the investors that you want to attract. Do this by letting your investors know which other investor is on board and why. When you create a belief that your company is going to be the next big thing, every investor is likely to want to be a part of it. Create a leverage. Bear in mind that Investors are driven by psychology.

The most important thing after running a successful fundraising is to close the round quickly. This will enable you to go back to work and move forward. Most startups drag the process of closing up and waste valuable time.

With adequate preparation, the process is likely to take about two months. Having gotten the necessary capital, execute the plans that you had accurately. Wise use of capital will impress the investors and who knows? They might be interested in putting more capital into your business or even expanding your capacity. Of course you can always say no when you realize your company’s visions and that of your potential investor are not aligned. On that note, ensure that the investors share in your vision and understand your kind of business.

─ December 19, 2019