Become a FundingHero
Are you considering raising funding for a tech startup?
If the answer is yes, then don’t become the 99% that fail!
Only 1% of start-ups are able to secure early-stage investment into their businesses. It's a tough process that claims more victims than creates heroes! Fundraising is a big, scary, and complex process for the first-time or early-stage tech founder, with hundreds of pitfalls.
However, there is no need to panic because a new chapter in fundraising has begun.
The big question when raising
The one on everyone's lips is “How do I become part of the 1%”?
Well, this is why FundingHero was born. FundingHeroes purpose is to help early-stage tech founders learn the rules, prepare to succeed and then dramatically improve their odds to raise that critical early investment.
Fundraising is a fragmented process that needs a broad knowledge base, an understanding for finance, and a range of skills if you are to be successful. Simply trying to find where to start is daunting. For example, if you Google articles for advice it tells you to do X, whilst LinkedIn gurus tell you to do Y and your best friend tells you that you must do Z. This is just confusing and frustrating!
The rules of the game
With so much uncertainty, the first thing you must do is learn the rules of the game and treat it as a long, strategic process you need to understand before you even try to start approaching investors. This is why FundingHero was born.
FundingHero is the fountain of knowledge and go-to for wanna-be early-stage tech fundraisers because we make things simple. For example;
- We show you step by step how to create a raise strategy
- We give you the knowledge on how to find and approach investors
- We Explain how to value your company
Founders need all of this whilst making it affordable for a bootstrapped budget, so we’ve focused hard to help save you thousands on large advisor fees and expensive early fundraising mistakes.
One simple goal: Create millions of FundingHeroes
We aim to help the many, not just a few on their entrepreneurial journey and create millions of FundingHeroes along the way.
Because the majority of first-time or early-stage founders find fundraising time-consuming, complex and daunting, we have developed a platform to be your fundraising hub. All our knowledge and tools in one place.
Our guiding principle is to help remove the common barriers, educate on the fundraise process and explain the rules. All of this combined will reduce the common fundraising mistakes, reduce the stress placed on Founders and ultimately create more successful entrepreneurs. If you are equipped from day one, then you can avoid some of the first time fundraising scars and preserve your mental health to focus on what really matters.
The good, bad and the ugly of fundraising
Our experience has seen the good, the bad, and the ugly in fundraising, so we were inspired to make an impact and help the 99% that were unfortunately destined to fail before they even started. We understand the rigors of what it takes to build, raise, grow, and exit a business, so we’re best placed to prepare you before you reach out to try to convince investors you are the jockey to back.
FundingHero gives you the solutions you need to learn and navigate your first or subsequent fundraises, so there are fewer surprises and you can prepare properly.
In this post, we will identify the common challenges that are the recurring causes of so many startups failing to raise early-stage funds to get off the ground. We want you to avoid the issues we see frequently and often lead to failure and significant mental stresses.
Challenges In Fundraising
As stated, just 1% of businesses are successful at actually raising their early funding rounds. It is an incredibly tough statistic to swallow if you are considering raising. It's a mountain to climb, so you need to be prepared because the cost of failure is high. Crushed dreams, lost investment, damaged reputations, it’s the reality so many fall victim to every day.
There are several major challenges associated with fundraising and the most commonly identified challenges we witness every day are;
1. Greater than 60% of a founders time is spent raising
It's a full-time job. Not a few hours here and there, it's full-on and full-time. Fundraising requires an awful lot of work over a prolonged period of time and when you are having to learn the ropes for the first time it takes even longer!
Fundraising is a time-sapping process, that requires hundreds of different activities completed, with many running in parallel and causing a huge conflict of where is best to focus your efforts. All of this time is time you aren’t spending on your business either selling, designing your product, or developing your marketing strategy. It all adds up, fast.
Most founders, therefore end up spreading themselves way too thin, then as sure as night follows day, something suffers which will either be the raise or the business or worse still…. both!
It then becomes the spiral of doom, when it drags on, and the chances of raising get less and less until you admit defeat and are forced to stop the constant chorus of rejections from investors.
You may have spent all of your time attempting to raise funds rather than thinking about your business and as happens so often, the business fails. All of that hard work was thrown away from the distraction of raising when you didn’t know the rules of how to succeed before you got on the fundraising bus to tech town.
When you are passionate about something you tend to set aside everything else and it makes you blinkered about what's actually about to happen. It happens in slow motion for outsiders to see and it's a horrible sight to see when things go wrong.
2. Early rounds can be the most expensive.
Before you’ve created much underlying value in your business in the early stages, raising money will always be at a low valuation. If you try to raise too much too early then a large raise amount at a low valuation means you are giving away a lot of equity, very early on.
This is where knowing how to value your business, typical levels of dilution that may occur at each stage and who you raise from to get the best valuation are all fundraising basics.
If you make a mistake in the early stages with your valuation and raise amount then it's pretty tough to reverse this and you might have cost yourself hundreds of thousands or even millions of value in your own business and you’ve sold it too cheaply.
While early investments might be beneficial, they should never come at the expense of diluting ownership too heavily whilst you are still trying to get your business off the ground and prove its worth. It's an expensive mistake to make and can be avoided if you learn how.
3. 6 months minimum to raise
A major factor in fundraising failure is because they start way too late. This happens out of either lack of knowledge, desperation or impatience.
When this is the starting position then the founder is on the back foot & ill-prepared. The daily fighting of operational fires whilst trying to plan investor meetings, updating pitch decks, creating due diligence requests, figuring out which legal docs are needed, and generally chasing their tails around in circles.
A well-managed campaign however has three to six months of network building & preparation then hopefully just three months of raising if executed well.
This time allows them to plan & prepare calmly, whilst trying to understand which investors they need, how they will shape their company's vision & narrative, get all of their fundraising materials ready, and finally their legal documents properly in order.
Founders that rush the process will fail as investors will skip the unprepared immediately as they can spot them a mile off like a cheap suit at a wedding.
4. No financial assistance
Fundraising is hard enough on its own, but it gets considerably more difficult when you do it alone. When you fundraise on your own, you are solely accountable for everything. You are the only person, to do EVERYTHING so you need to be the Director of, Product, Sales, Marketing, Finance and the CEO. The buck stops with you and your real title should be the Chief Decision Officer and now also the Chief Fundraising Officer.
With the title of Chief Fundraising Officer, comes the need to have real financial awareness & responsibility as Investors need numbers from a sound financial and commercial plan. They want to understand your revenue projections, breakeven analysis, and cash flow needs, all even before the mention of your KPIs.
This is where the stress starts to mount as you aren’t suitably qualified and you’re about to go in front of investors with your knees knocking as they ask you to simply “walk them through the numbers” and your spreadsheet looks like it was created on the bus whilst going to work.
These are just four of the common reasons 99% of funding rounds fail, there are hundreds more, which is why you need to learn the rules of the game if you want to stand a chance at succeeding and making it into the prestigious 1% club.
Don’t stall before you’ve even started
The worst thing to hear and observe is how early-stage fundraising failures can crush an entrepreneur's spirit or stop the next great business idea dead in its tracks forever before even getting going. All too often, early defeats destroy potential founders' passion, enthusiasm, and desire for going into business. For others it just serves to build them up with a new found resilience for next time, but with lessons learned and the knowledge to get help on the areas they are exposed.
That is why we have dedicated our time and resources to creating a platform and resource hub where you can learn the 6 pillars of fundraising, at your own pace and see how to:
- Create a fundraising plan to capture strategic needs, a realistic timeline, and a budget,
- Determine the right level to raise and at what valuation.
- Identify different investor types, plan how to approach them and when.
- Know what key investment materials you need, the format and how to create them.
- Create an effective pitch, ensuring investors understand your business opportunity.
- Prepare your complete due diligence information for a swift closing process..
Well, that's not all.
We want you to successfully raise funds. Aware, confident and ready with your eyes wide open as to what's needed to stand a chance of walking away with that precious early-stage investment.
That's why we've made fundraising easy to understand by developing step-by-step guides, that show you exactly what to do and how to do it:
1. Fundraise Dashboard
If you want to manage & track your fundraising process from start to finish, our dashboard has the answer. It allows you to record your raise amount, valuation, and priority activities all in one spot. Plus, it’s simple to monitor your fundraising targets with your progress charts.
2. Simple to use tools
Our fundraising canvases & templates are simple to use and go hand in hand with our knowledge base. You have access to funding templates to aid each fundraising task with a range of checklists, canvases, and other useful templates.
3. Funding knowledge base
You'll then know precisely what to add in each template with our instructional knowledge base, which is like having a 24/7 FundingHero ready with the answers you need across all 6 of our fundraising pillars to find your funding queries fast, in only a few clicks and all in one place.
4. Models, pitch deck guides, tools & templates
We know the common fundraising tools you need;
- Simple market analysis presenters.
- Guides & templates on how to build the killer pitch deck.
- Financial model explainers
- Different pitch deck templates
- Equity dilution calculators, and much more.
You don't have to waste time hunting for templates and tools online. We've gathered them all in one place to make your life easier and save you the stress and hours of searching online.
5. Investment sources
We've compiled a list of investors and accelerators to get you going for those who don’t have an immediate network to reach out to;
- Angel groups
- Family offices
- Venture Capital
With hundreds of sources to choose from, you'll find your right match and save time, allowing you to hopefully complete your fundraising goals faster.
6. BIG VALUE for small budgets
The FundingHero platform offers incredible value. Invest in yourself for a lifetime of fundraising education and through our platform you get:
- 12 months of access to over 50 tools
- Fundraising Dashboard
- Investment trackers
- Fundraising library of knowledge
- Financial model framework
- Pitch templates
- Investor lists
Choose FundingHero to learn how to raise capital
Finally, if you're looking to learn how to raise capital for your early-stage tech startup then the perfect option is FundingHero.
We help you avoid the hundreds of mistakes and teach you the rules of fundraising for your entrepreneurial journey, rather than learning the hard way like 99% of aspiring founders do.
So, whether you are planning your own tech business and want to learn more about fundraising for a tech company, or you have an early tech product released then FundingHero is here to help.
If you are serious about becoming a successful entrepreneur, being your own boss and bring your vision into reality then invest some time in yourself up front and learn the rules of fundraising. You will save yourself months of time, avoid so many mistakes, and give yourself a chance to raise the money you so desperately need to create your dream tech company.
Investing in yourself is the most valuable investment you can make.