Week Ten – Investor Ready – 11 ways to improve your odds in raising capital

Throughout the StartFast program we drive our teams to build great companies and stress that this is much more important than raising money. Nonetheless, building a high-growth company requires financing. So we guide our companies to be financeable (to avoid the four pitfalls pointed out in StartFast the book and) by validating a large market opportunity, proving that there is an attractive way to make money in it, and building a strong team that can execute on that. StartFast’s Demo Day, unlike many recent demo days we’ve heard about, will be rife with opportunities for investors. All eight StartFast companies are seeking investment partners, and all eight will be investor-ready. Here are 11 ways from the StartFast book to get your company investor-ready and improve your odds of raising capital:

  1. Have a product or service that people are using and that is generating some revenue.
  2. Be able to relate how your product or service helps your customers make more money, save money, change their lives for the better or save their lives.
  3. Identify your target market; fast growing markets are best.
  4. Know who your competitors are and how you’re different.
  5. Have a written sales and marketing plan identifying who your customers are and identifying proven cost-effective go-to-market tactics.
  6. Have a forecast of how your business will grow over the next 2-3 years.
  7. Have intellectual property agreements in place with your team. Have any relevant patents filed.
  8. Make sure your team has both entrepreneurial and domain expertise and has invested a lot of its own time and money into the venture.
  9. Use well-respected professionals (attorney, accountant, IP attorney) to represent you in the financing.
  10. Know the kinds of deals prospective investors do, which companies they’ve invested in and cite parallels between them and your company.
  11. Unless you’re looking at more than one offer, let the investor lead the discussion on valuation.

Our teams are busier than ever this week. Not only are they building great businesses, but also making sure they’re investor-ready, with virtual data rooms to support efficient due diligence. While it’s true that several savvy investors are already having meeting with StartFast teams, we look at Demo Day as the moment we’re managing to the peak of investor readiness. There’s always time to meet with interested investors. After all, either it’s just another chance at pitch practice, or something more.