You want to raise capital, you have prepared your business plan and refined your equity story to reach out to investors - but who to contact and what is the right way? Not all investors are created equal.
The "upside" is that early-stage, high-growth companies have a broad range of options available to raise capital. The "downside" is that to raise on the right terms, understanding the various types of capital available and navigating the investor universe effectively is crucial.
Not all investors are created equal
The most common type of investor are venture capital funds. This in itself can already be a complex landscape to navigate, as each fund has got bespoke strategies, philosophies and investment focus.
For instance, some funds are vintage, whereas others are evergreen funds. Some funds are industry agnostic, others will only invest in specific sectors. Some funds will take a hands-on approach to help you run your company, others will take a more passive role.
Besides a source of precious liquidity, venture capital investors will typically be long-term partners to your business more often than not. In many cases, they will take a seat on the company's board and impact strategic decisions going forward.
Understanding the nuances which distinguish different funds is paramount in coming to a correct decision. Our fundraising specialists have experience dealing with the venture capital landscape and they can assist you in scanning and navigating this universe.
In addition, when approaching funds, you might want to think about the following:
Messaging
- How do you convey your vision and company to investors?
- Do you have a clear, compelling, but also credible story?
- Are your materials polished and do they touch on all the key points that investors want to address?
Timing
- Have you considered current venture capital appetite? Are you approaching funds at the right time of the year?
- What are the valuations in your sector?
Outreach
- Will you be reaching out to a broad range of investors or only a handful of favourites?
- Will you stagger you approach with investors and if so, how? Creating competitive tension can make the difference between a deal succeeding or failing, as well as cause significant valuation uplifts!
- How will you stage your due diligence process and the release of information to investors?
Our specialists regularly advise companies on a number of fundraises and can help you craft or fine tune your messaging and your approach to investors.