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Demystifying the Fundraising Process for Startups

Source: Nilesh Balakrishnan, WaterBridge Ventures


So, you want to raise VC money?

Here are the pre-requisites:

  • It's a full-time job with highs & lows

  • Learn the art of storytelling, it's essential

  • Remember, money does matter

  • Look for VCs that can serve as long term partners

  • Know how much capital you need

  • Pitched to one, don't stop/wait, continue to pitch till you close the round


Know your funding needs

Determine how much you are raising as that affects who you approach, and the best way to do this is below:

  1. Identify a north star metric - a key purpose/goal for fundraising

  2. Set goalposts & target metrics to achieve (12-15 months)

  3. Plan for 18-24 months out

  4. Identify resources needed to achieve that goal

  5. Work out burn & ideal runway

  6. Avoid elaborate financial models, these are mere projections

  7. Amount of raise dictates the likely investor, are they comfortable with that ticket size?

  8. Less is more in the early stages


Knowing the type and stage of Investor you need is half the battle!


What might be impressive to one might turn off another!

Types of Funding Rounds for VCs:

  • Seed: Testing out an idea at a small scale (Up to $1 Mn)

  • Series A: Idea works but can it work at scale? ($3Mn-$5Mn)

  • Series B/C: Works @ scale but can it still make a profit while scaling? ($20Mn-$80Mn)


Prepare for a fundraise battle

The journey is challenging but with the proper preparation and resources, you can maximize your chances


A. Investment Deck

  • Cornerstone of any fundraise

  • Should be short & crisp

  • No more than 20 slides

  • Build a rapport, not a thesis


B Elevator Pitch

  • Perfect an intro paragraph

  • Ideal for emails / cold calls

  • Keep it short & succinct


C. Business Plan

  • Project your major expenses

  • Post realistic revenues

  • Outline major assumptions


D. MIS

  • Track your major KPIs

  • Keep data room ready

 

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