Startup Fundraising 101
Recently we inducted Startup Cohort-2 at #NICAT: Pakistan’s 🇵🇰 Premier Aerospace ✈️ and DeepTech 🛰️ Incubation Center. The year-long journey of these startups with us comprises three stages: Problem-Solution Fit, Product-Market Fit, and Business Model Fit — the very DNA of the NICAT Incubation Program.
As some of our Startups are looking to raise funds, this beginner’s guide is not just for NICAT Startups but for every startup looking to start a Fundraising journey. First things First, Let’s start by addressing the fundamentals. Startups need to have a “Repeatable, Scalable Business Model” — Steve Blanck. Business Model is how Companies “Create, Deliver & Capture Value” — Alexander Osterwalder. Here’s a quick help if you want to refer Getting From Business Idea to Business Model. Startups looking to raise Angel, Pre-Seed, or Seed must use a Mentorship Guide for Startup Founders. My personal advice is to raise funds after achieving Problem-Solution Fit and you should be building your Startup’s Sales Engine by now: Sell Like Crazy is the best help.
Fundraising Plan: most early-stage companies should estimate 6 months to close a round. Two great resources are the Y-Combinator guide to seed fundraising and DocSend The Startup Fundraising Playbook. The fundraising plan would look like 1–3–2 rule:
- 1 month — Preparation. Familiarize with Startup Glossary. Create a teaser deck, pitch deck, data room, due diligence checklist, and investor database to kick off your raise. Make a sales funnel of Investors with approx. 1% closure rate.
- 3 months — Pitching. Reach out to 100+ Investors and try taking meetings with investors. DocSend Pitch Deck analytics can be super helpful.
- 2 months — Closing. Negotiate Term sheet, Complete due diligence and legal work to close this round. Investor Money is Sacred-Trust, strive to live by it!
Use Generative AI, ChatGPT, and Google Bard to assist you throughout your fundraising phase.
PitchBook, Crunchbase & DocSend are your best friends during this journey!
PitchBook is the premier resource for comprehensive data on the global capital markets and proprietary research and insights designed to empower your best work.
Crunchbase is the leading destination for company insights from early-stage startups to Scaleups.
DocSend provides amazing Startup Fundraising & Pitch Deck Analytics. You can send trackable versions of pitch decks, see which firms are engaging & sharing, and know exactly who is looking at your deck.
The million Dollars Question is, What should be included in a PitchDeck?
What makes a Startup Pitch Successful? It’s figuring out a great Problem, innovating the right Solution, large addressable Market, figuring out a repeatable scalable Business Model, and a killer Team = that gets your Startup funded!
You have accumulated the firepower and all you need now is Confidence & Body Language to win this battle!
Your body language may shape who you are, is the signle most powerful thing by Dr Amy Cuddy, Harvard Business School professor that can change your life. The biggest lesson here is:
Fake it till you Make it! Fake it till you Become it!
Here are some additional tips for fundraising for your startup:
- Tell a compelling story. Investors want to invest in companies that have a big vision and a strong team. Be able to tell a story about your company that will inspire investors to get behind you.
- Focus on your traction. Investors want to see that your company is making progress. Highlight any traction you have, such as customer growth, revenue growth, or partnerships.
- Be realistic about your valuation. Don’t overvalue your company or you’ll scare off potential investors. Do your research to determine a fair valuation for your company.
- Be professional and prepared. When you’re meeting with investors, be professional and prepared. Dress appropriately, arrive on time, and have your pitch deck ready.
Fundraising for a startup can be a challenge, but it’s essential for growth. By following the tips above, you can increase your chances of success.
Parting thought: Be Confident yet Be Humble. Confident Humility is the name of the Game!
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About the Author: Imran Jattala is Project Director, National Incubation Center for Aerospace Technologies (NICAT). He tweets at: ImJattala
