Fundraising - a key milestone in every startup's journey. Starting a new venture and trying to find funding can be an intimidating process. Before you seek external funding, there are a few essential things to keep in mind to maximize your chances of success. Here are three key pieces to keep in mind before starting this process:
Obtaining customer, problem, and market validation.
Making sure your cap table is in order.
Pitching to 20 people.
Taking the extra time on these pieces before starting your fundraising will increase your chance of success.
Obtaining customer, problem, and market validation - too often, companies "launch" their business before validating their business idea. Additionally, the problem with not seeking out customer feedback on the front end is that you might need to know if you are solving the right problem or if customers will be willing to pay for your product. Conducting customer interviews on your product will help validate your solution and ensure there is a "fit" in the market for your product.
Make sure your table cap is in order - startups often have the mentality of "building the plane as it flies." Therefore, it is common for startups not to have the foundational, legal, and governance issues figured out before beginning the fundraising process. For example, ensure any co-founder and company agreements are finalized and in writing, and any friends and family investments are papered properly. This common issue can derail a funding round before it's off the ground.
Pitch to 20 people - before asking for money, pitch your business to 20 people and know your business forwards and backward. As a CEO and founder, your job is to sell. Sell to inventors, customers, and prospective employees. Most people need to practice this more, so know your pitch and practice before kicking off your fundraising.
If you want to maximize your fundraising potential, following these three tips will center you in the right direction. If you want to take it a step further, building a data room with fundraising documents will prepare you for these conversations. This process can be daunting for anyone, but being prepared will set you apart from your competitors as you advance your fundraising efforts.
What is The Combine?
Invest Nebraska's Combine Incubator is a statewide initiative focused on supporting high-growth agri-food entrepreneurs through mentoring, commercialization support, physical incubation space on Nebraska's Innovation Campus, and a network of helping farmers and ranchers across the state. Invest Nebraska is a private, non-profit statewide venture development organization focused on high-growth companies in Nebraska and growing the state's entrepreneurial economy. Invest Nebraska works directly with entrepreneurs, researchers, and companies to help commercialize their technologies, launch and grow new businesses, and access needed capital.