Pillar 1 – Introduction to Raise Strategy

Pillar 1. Introduction to Raise Strategy

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Why create a fundraising plan?

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As Warren Buffet states;

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“An idiot with a plan can beat a genius without one”!

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A pretty stark statement from someone who is no stranger to knowing what it takes to succeed in business.

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The common words that reverberate in a founder’s mind; “I haven’t got time to create a fundraising plan…. I’m too busy juggling 101 things, I’ll figure it out as I go, I’m just going to start reaching out and see where it goes!” Well, that’s one path you could take, but 99% of the time it leads to failure as the great Mr Buffet would no doubt confirm.

It’s a full time job and when done poorly it leads to;

Very expensive mistakes
Huge amounts of wasted time
Missed opportunities
Little to no funds
A failed business before it’s even really started

All of this because of rushing, not understanding the rules of the game and impatience. No one is taught how to fundraise, it’s a painful learning curve founders learn on the job and most will sadly fail. They fail not because they aren’t good enough entrepreneurs, they simply fail as they don’t know the rules of the game as there is no school for fundraising.

So, the only way is to approach the process is with the focus and time it deserves, learning the ropes first. It’s long, complex, time consuming and stressful, so starting it underprepared is a huge risk and why 99% fail, spend over 6 to 12 months trying, then eventually giving up, stressed, exhausted and hungover from the process. Put off for life and heading back to the 9-5 to work for somebody else.

This is why the age old saying of “You don’t know what you don’t know” never rang truer when raising money. It’s something entrepreneurs will only do a handful of times in their lives and everyone who has will testify that it’s really tough and definitely no walk in the park, only the strong or lucky succeed. Some will enjoy it, whilst others hate every minute of it, but you need to prepare yourself for the breadth of things needed and the depth of issues that you need to navigate through.

So, to the question of “Why”! Simply put, if you start with a clear strategic fundraising plan, you will gain huge value and avoid tons of costly mistakes, this really can’t be overemphasised. Every founder needs to commit such a huge undertaking of time with their business’s future on the line, but a small investment of time up front to plan what you need and what to expect from the process will bring huge value – hopefully 10x more than the value of cash you raise!

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What does 10x in value mean?

During your raise you are reaching out to a much wider audience, having more conversations and walking into more opportunities. You and your business are getting out there. So you have the ability to gain something far more valuable than just cash from the raise, you can gain value in multiple ways & seek smart money. Smart money is a term that refers to how Angel or other investors can bring much more than just cash. It’s about the skills, experience and network they bring that can add significant value to your business. Cash is critical, it’s tangible and you’ll only get so far without it, but you & your business need far more than just cash. Examples include;

A new Angel advisor who knows your sector really well helps you decide & justify your valuation and saves you 5%+ dilution.

Creating huge value In the long run that could be worth Millions of £’s in real cash.

A new investor has the ability to follow on to the next round.

Creating huge value for the next round and creating momentum from the start.

A new partner you meet opens up a new sales channel.

Creating huge value with new revenue streams and collaborative marketing.

You find an experienced advisor, who has successfully started, grown & exited a company or companies.

Creating huge invaluable experience as they have the scars & successes to guide you.

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These are 4 very simple examples, but rarely do you see people target the 10x in value as much as they focus on the cash itself. Rarely do people attribute a number to these, it’s just “great additions”.

If you consciously focus on finding and unlocking value and not just cash in your raise then the process takes on a different dimension, creating 10x in value and can really propel you post raise. Value creates velocity!

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What is a Strategic fundraising plan?

Breaking this down into its simplest form, it is all about the 4 top level questions of;
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When do you need to start the process and close your round?
Where will you find the right investor types for your needs?.
How much do you need to raise?
What do you need to prepare for an efficient and effective fundraise?

This will focus you to create valuable raise goals and fully explore what you can gain from such a valuable process and investment of time.

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The goal is to remove as much friction from the process as possible.

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When you’ve started to define the top level questions you should then step through our 6 pillars of fundraising to understand where you need help to plug those missing holes. These are:

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Raise strategy
Raise amount & valuation
Investment landscape
Investment materials
Pitching
Due diligence

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Each pillar has a range of canvases and tools to help simplify and prepare you for the common things you’ll need on your journey. Our canvases have been designed to focus on the core areas in each topic, so you can capture the key things relevant to your business and your raise process. You can then maximise the process and avoid expensive mistakes as 99% of early stage tech founders make.

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If you rush into the process or fail to prepare properly, you will undoubtedly get caught out along the way with big potential consequences. Creating a raise strategy is akin to a quote from Albert Einstein; “a clever person solves a problem; a wise person avoids it” …. So don’t be the person with their busy head down, trying to solve every problem as you go. Be the wise person and avoid them completely!

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Fundraising shouldn’t have a 99% failure rate!

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To make it simple, within our platform FundingHero has broken the initial preparation process down into 4 steps, so you can create a powerful and effective raise plan;

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Raise plan
Raise strategy
Raise budget
Raise timeline

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These 4 tools in our first pillar called Raise Strategy will help you prepare before you step through the other 5 pillars. FundingHero is your all in one platform for tech founders looking to raise their early stage funding. We teach you the rules of fundraising to help you to Learn, Prepare & Raise.

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Our platform gives you access to:

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