Paul Bianco, Investor & CEO at Graphite
Transforming an incredible idea into a profitable, scalable business is every founder’s dream. It can be a daunting process, though. Getting your idea off the ground and into a globally accepted brand is no easy feat.
And it’s not cheap, either.
The average seed investment startups require is a whopping $500,000-$2 million. Most people don’t just have that lying around in their business savings account. For highly scalable business ventures, venture capital is arguably one of the most common sources of financing.
If a SaaS founder can combine business acumen, leadership, and networking along with this influx of cash, business growth will accelerate rapidly and outpace any competitor on the market.
However, securing venture capital itself is not a simple and painless process. It takes an intentional and strategic mindset to set yourself apart from the thousands of other startups pursuing the same funds.
Once you’ve decided that you’re ready to raise venture capital, this guide will walk you step-by-step through the process of how to raise capital for your startup.
1. Identify Your Business Needs
The first step in identifying what your business needs is a detailed business plan. Document how much funding your operation needs, as well as why the funding is needed.
A detailed business plan helps to build out your fund-sourcing pitch:
- When to pitch.
- How to frame your pitch.
- Who to pitch to.
A significant part of your business plan is integrated into the pitch deck itself. But you can also give a copy to VCs afterward to prop up your presentation.
A detailed business plan covers your goals, target market, competitive landscape, offered solution (your product or services), and financial projections. Each of these considerations is a key piece of information that venture capitalists analyze before making funding decisions.
2. Find Out What VCs Care About
You’ll go into your pitch with a strong understanding of the positive impact your product or service will have. However, failing to do your homework on what the investors you’re pitching care about, you may fail in getting them to experience the same passion or urgency that you have.
Before you deliver your pitch, research as much as can about your potential investors and the niches/industries they’re interested in. Nuggets of knowledge about core values, previous investments, company goals, hobbies, previous work experience, etc. are great to have in your arsenal.
Consider bringing in relevant subject matter experts on topics you’re unfamiliar with to help you craft a pitch that is hyper-targeted to the exact people sitting in front of you.
These small details will make the difference between them connecting with your value proposition or not.
3. Make Connections in the Startup Community
The phrase “it’s not what you know, it’s who you know” rings especially true when you’re figuring out how to raise capital. You need to be very involved in the startup community.
Focus on building relationships with VCs, angel investors, and industry peers ahead of your capital-raising journey. This is a fantastic way to get insight into what potential investors really care about—and perhaps get yourself a coveted spot in the pitch room through direct contact.
Asides from just raising funds, networking with like-minded, forward-thinking entrepreneurs and startup founders put you in a winning community where ideas, collaboration, and opportunities flow generously.
4. Hire Industry Pros for Expert Insights
Outside of networking on your own, engaging the expert insights of an experienced financial professional is strongly advised.
Hiring a finance pro can be the game-changer you need to successfully raise venture capital.
Aside from boasting established networks of angel investors and venture capitalists interested in your pitch, these experts help you format your pitch in a way that speaks to potential investors’ and what they care about most…making a return on their investment!
At Graphite, we can be your CFO partner long-term and help make you look more attractive to VCs. We do everything from creating customized financial models to providing robust financial reporting to helping you keep your books clean and audit-ready.
A team like ours will help you lead the charge. But, it’s important for you to stay involved in the process and not be too hands-off. VCs appreciate founders who show a relentless commitment to their business’s success.
Our financial model template will help you get ready for VCs.
Used by hundreds of the best startups
5. Identify Investors in Your Business Niche
Typically, investors latch onto preferred business types. It’s wise to identify investors whose interest aligns with your startup for better odds.
Choosing an investor with a specific interest in your industry gives you access to their wealth of business-industry knowledge. Ultimately, this boosts your odds of overall business success.
This is where you may see the benefit of working with an expert advisor, as they can provide insights on which investors to target.
Once you’ve identified investors in your niche, there are a few key criteria to narrow your search. Consider funding terms, investor’s network, investor’s reputation, etc. You must choose investment partners committed to scaling your business that have a track record of helping other businesses achieve scalability goals.
Many investors now act as supporting partners to their portfolio companies as well. They lend a hand in marketing, growth, hiring, and more. Because of this, it’s crucial to find an investor that’s a good fit and can match the type of support you need.
6. Create a Winning Pitch Deck
So, you’ve identified the perfect investor(s) and got yourself a slot on their calendar. Now, you need to craft the perfect pitch deck to seal the deal.
A pitch deck is critical to winning desired funding. Use storytelling to captivate and engage the room of investors. The goal is to present your vision and get the investors to feel as if they’re going to miss out on a massive opportunity if they don’t invest.
You want them to leave the room buzzing with motivation and excitement.
Typically, a winning pitch deck features 10-12 presentation slides covering:
- Vision and Value Proposition
- The Problem
- Target Market and Opportunities
- The Solution
- Validation Roadmap
- Revenue Model
- Marketing and Sales Strategy
- Your Team
- Use of Funds
The best practice for a pitch deck is to include enough information to show that you did your research and to get your audience excited. But avoid information overload that leaves people exhausted, checked out, or unable to ask more questions.
You Know How to Raise Capital…Now What?
Top venture capitalists receive a truckload of pitches yearly and only invest in between 1-5 businesses.
You need to stand out from the sea of pitch decks. To do this, you need a deep understanding of what investors are looking for. And you need an expert advisor by your side to help you make the right decisions.
Graphite Financial is a team of financial advisors, accountants, and outsourced CFOs with vast industry expertise. We specialize in high-growth startups, overseeing business accounting and finance, from strategic projects to managing entire finance teams.
We partner with forward-thinking businesses, from seed to exit, helping draw the big financial picture, raise venture capital if needed, and scale your operations.
Now that you get how to raise capital, are you ready to speak with expert advisors and start your fundraising journey? Chat with one of our CFOs today!
Need CFO or Accounting Help?
Born out of a VC fund, Graphite fully understands the strategic and financial needs of high growth companies. If you need accounting support or simply have a question about accounting at your company, feel free to connect with us!
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