Why do I need one?
Whether you are raising Seed Round, Series A or Series B – hiring a fundraising specialist is not the luxury it is often seen to be. Unless you have the time and in-house expertise it could be a necessity.
Can your business function whilst you are off fundraising?
Fundraising is time-consuming. That is why so many founders, owners and CEO’s we speak to have been kicking their fundraising ambitions down the road for years.
If you have already fundraised once, or twice, you won’t need us to tell you about the demands of the fundraising cycle. Without dedicated help it inevitably involves a relative step back from the day-to-day operations of the business. This can really affect KPIs, growth targets and your overall commercial success.
Levelling the expertise playing field when dealing with investors
It is crucial when you pick an investor, and it is as much about you picking them as the other way round, that you work well together and that everyone’s expectations are aligned. There is a human relationship side to this. There is also a technical and legal component. Investors have teams of M&A, legal and due diligence experts in their corner and they have experienced and learnt from good and bad investment outcomes. The chances are that they are in an advantageous position vs you when it comes to structuring a deal so that their funds are protected in the event of failure or growth.
A freelance fundraising specialist knows the skill set and mindset of an investor; VC, PE or Institutional. They can help you structure a deal so that it works for both parties, align expectations and foster a productive relationship from day one.
Test if your company is as good as you think it is
You know your business inside out, but it is hard to not be biased when it come to analysing the vulnerabilities and growth metrics. You are too close to it. An investors expertise is focusing in on a business model and pulling apart any assumptions the CEO has made about market, industry and consumer growth trends. The current fundraising market is tough due to economic uncertainty and the growth for growth's sake mentality is dissipating. Investors expect pragmatism, attention to detail and accurate forecasting – sometimes it is hard for a founder or CEO to separate the dream from the reality.
A freelance fundraising specialist can analyse your business with fresh eyes and be constructively critical ahead of an investor meeting. You often only get one chance to make a good impression and its best to adapt your modelling, growth assumptions and competitor market reporting to fit with an investor’s perspective.
Avoid the steep fundraising learning curve
There are plenty of examples of founders and CEO’s successfully manoeuvring the fundraising cycle independently. Learning from each meeting and knocking on as many doors as possible can get the job done. That said, they are the exception, not the rule. The reality is that you only have a finite amount of time in the fundraising cycle and momentum is key. It is a niche community and you shouting from a megaphone isn’t always the best approach. Each meeting needs to be targeted, well timed, and delivered effectively. If you spend too long learning how its done you may have missed your opportunity.
A freelance fundraising specialist knows the timing of the market, which investors are actively interested in sector specific investments and how they like to be approached. A one stop shop pitch deck won’t do – instead a freelancing specialist will tailor the messaging to investors. Save time, work efficiently and be guided by experience.
Customise your pitch for all types of investors
If you are Seed round fundraising, you will likely be dealing with a combination of angel and VC investors. They tend to specialise in early-stage investments and often have founders, entrepreneurs and startup skill sets in their team. This is great because it often makes them more relatable since they have been in your shoes. It is likely that they have an abundance of experience of scaling, structuring investments for long term exits and seed round due diligence.
If you are at Series A or B then you will be dealing with larger and more formal investors who will be looking at structuring their investments across several rounds and might have specific exit routes in mind.
If you are at Series C or at a later fundraising stage, then larger Institutional investors bring a whole new perspective; more formal and financially complex.
A freelance fundraising specialist can prepare you and coach you to deal with each investor type. They can adapt the modelling and forecasting to include tailored 5-10 year forecasts with multiple risk scenarios. If you do not anticipate investors needs and questioning in advance it will put you at a disadvantage at the due diligence and negotiation phases of the deal.
What information should I prepare?
The more detailed the project brief, the better:
Your company and its story are unique and is part of what will appeal to investors. You need a freelancer fundraising specialist who you trust to translate your vision into investor materials and represent you in the market. When submitting your project / fundraising brief make sure to flesh out the below points in as much detail as possible. Yes, you want to put your best food forward, but you also want someone who is going to add genuine value – so an honest and frank assessment of your current market positioning and success to date is essential:
- Your story, the teams background and the company’s vision. Why should investors back you.
- Initial thoughts on current valuation
- Your fundraising targets and rationale / supporting documents. How you got to this figure and justify it is crucial in attracting a quality specialist. They want to work with someone who sets realistic goals.
- What you plan on spending the raised capital on. Focus on your business requirements rather than how this looks to investors at this stage – the specialist can refine the messaging.
- How you see the market and your competition. Your specialist might, or might not be, an industry specialist. Either way, how you frame your market positioning says a lot about you and your growth prospects.
Be clear about what you need and your expectations
It's important to be clear and concise about what you expect from the fundraising specialist. They will help you refine the exact responsibilities and deliverables, but you need to take charge in setting expectations and minimum requirements before fully engaging them. This is partly to protect your budget. A traditional open ended fundraising arrangement can scope creep quite easily since the fundraising cycle is unpredictable. The clearer you set clear milestones and boundaries, the easier it will be to stick to budget and the happier everyone will be regardless of the fundraising outcome.
To help you set expectations, here is a breakdown of the fundraising cycle. Think about which areas are outside your team’s expertise.
The fundraising cycle is split into four stages and the highlighted tasks are the minimum you should expect from an experienced fundraiser.
Pre Deal
- Valuation
Preparation
- Investor Materials (equity stories and drafting of presentations)
- Financial Model & KPIs (preparing projections, analysing KPIs, building financial models)
- Define investor targets (investor research and management)
Diligence and confirmation
- Sharing due diligence with investors (vendor data room)
- Due diligence
Budget
Be clear about what you can afford and have an open discussion at the outset about what that realistically equates to:
- If you just need help with specific parts of the fundraising cycle, we recommend you form fundraising milestones broadly in line with the stages we set out above. Then create budgeted milestones for each area and agree to them ahead of launching with the specialist.
- If you want a full fundraising advisory service, we recommend you agree on a monthly retainer with specific deliverables to prevent project scope creep at your end or the freelancers.
- Some licensed brokers are paid based on a percentage of the successful fundraise. Naturally, those individuals are picky about what clients they take on to make sure they get paid. It’s not our preference but it is common practice in the market.
How to choose the right fundraising specialist
Choosing the right person
The right level of expertise for your needs:
Execution: If you are just looking for someone to help you with modelling, valuations and due diligence you can focus on someone who has decent (3+ years’ experience) M&A /corporate finance experience in a respected investment bank or boutique.
Advisory: If you want aright-hand person to assist strategically and deal with investors you will need an experienced fundraiser with 10+ years’ experience across VC’s, Private Equity firms, Scale-up advisory or as an investor. They will have a strong network in the fundraising community and have their finger on the pulse of the fundraising market – this requires years of experience and active relationships in the community. At this level of seniority, they can do the technical financial modelling work themselves or outsource that to someone less experienced to save you money.
Industry expertise
The specialist does not have to be an expert in your vertical. However, if you want someone to assist you strategically it certainly helps. Look for a track record having closed deals and advised companies in your sector. The size of the deals is helpful as well.Its impressive if they have only worked on IPO’s and Series C deals but is that relevant to you? If you are raising £5-10m Series A then you want someone who has experience at that level.
If they are not an expert on your competition and market it should not be a deal breaker. These are veteran fundraisers, and they are adaptable. Test how well they respond to your brief and how quickly they have understood your commercial positioning. If they respond with constructive advice then they could still be a good fit.
Personality
How well they align to your communication style is important. This needs to be someone who gets you and your vision for the company. You will be working closely together, and they will be representing you in the fundraising market. Use an introductory call to assess if they are a good fit.
Finding a good freelance fundraising expert can be a game changer for your business. It can be difficult to find the right person at the right budget. At Ithaca we do a lot of that hard work for you:
- We help you put together your fundraising brief and milestones
- We get a handful of custom proposals to come to you.
- We help you setup preliminary calls to see if it’s a good fit.
- All before you have to commit to the process.
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