Fundraising for your startup is like being a superhero on a mission. It requires a delicate balance of power, value, and appeal to investors. You don’t want to pitch too high and lose interest or pitch too low and raise doubts about your offering. So, how can you navigate this challenging terrain and reach your funding goals?
Enter, FundingHero Pillar 4 – where you learn about Raise and Valuation. Consider this pillar your ultimate ally in the world of ‘how much to raise and at what valuation’. Our blog will share a few pointers, shedding light on the crucial elements you need to consider throughout your funding journey.
Pillar 4: Raise and Valuation: How to set your raise up for success
Are you eager to learn more about valuation? Look no further than Pillar 4 of FundingHero’s comprehensive framework. It covers everything you need to know about determining the right level to raise funds and establish a valuation that preserves your equity’s value.
Secret Superpower: Little and Often
When it comes to raising funds, small steps can lead to significant leaps. Instead of going after big investors right away, opt for raising funds little by little. This approach ensures that you retain control and ownership over time. Aim to raise funds every 18 to 24 months, selling only 10-20% of your equity with each round.
Defining Your Funding Goal: Plotting Your Journey
Every funding round requires a clear understanding of how much you need to raise. Start by identifying your funding milestones. Do you plan to expand your team or invest in product development? Setting financial goals and charting a course for the future will help you determine the amount of money required for each step.
Calculating Costs: Avoiding Red Flags
Once you have your sights set on the next milestone, it’s time to calculate the costs involved. Determine your monthly expenses and add a six-month cushion to account for unforeseen costs. Remember, asking for excessive capital may raise concerns among investors. Show confidence in your business by aiming for a funding period that aligns with your profitability timeline.
Your Business Valuation: Unlocking Full Potential
Now that you know how much you need to raise, it’s crucial to establish the valuation of your business. Several factors contribute to your business’s value:
The Round of Funding: Adjusting your equity portion based on your stage of development is key. Early-stage startups may need to sell a higher percentage of equity to attract investment.
Your Superstar Sidekicks (AKA your team): Investors seek confidence in the team driving the business. Showcase the expertise and track records of your team members. Also, outline plans to address any skills gaps, as a strong, cohesive team is essential for profitability.
Power of Your Product: Demonstrate the strength of your product or service by showcasing traction within your target audience. Conduct thorough market research to understand your product’s positioning and competitors’ valuations.
Financial Forecast: While predicting distant future finances is challenging, a strong forecast for the next 18-24 months is crucial. Projected income, estimated expenses, and expected growth should be documented. Clear KPIs and milestones will provide investors with a transparent roadmap of their investment.
FundingHero: Your Trusted Sidekick To Learn About Raise and Valuation
FundingHero is here to simplify your funding journey. Our comprehensive modules offer actionable steps, customisable templates, and simplified financial forecasting. With FundingHero, you can strategically plan your raise, determine the right amount and valuation, and navigate the investment landscape with confidence.
Sign up to FundingHero to discover how we can simplify and empower your funding journey.
