\n<\/p>\n
The new year is a great chance to reset your fundraising plans and develop positive new habits. In today\u2019s economy, raising funds requires more preparation and strategic thinking than ever. So, what resolutions should you make?<\/em><\/p>\n Our latest article as part of our \u2018investment ready\u2019 series provides essential \u201cdos and don\u2019ts\u201d for startups seeking funding, drawing on expert insights from our brokerage team and angel investors across our network. Let\u2019s make 2025 the year of the angel.<\/em><\/p>\n One of the most significant risks for startups during fundraising is running out of runway. Adequate financial preparation can mitigate this risk, providing the necessary buffer to navigate a potentially extended fundraising period.<\/p>\n Yet there is a lack of awareness about just how long it might take. According to our recent survey of startups in our network, 54% of those who had raised revealed it had taken longer than expected, versus just 17% who said it was quicker than expected.\u00a0\u00a0<\/p>\n According to Phil McSweeney, angel investor and author of AngelThink: \u201cFounders should prepare themselves financially well in advance \u2013 be prepared to survive off savings or part-time earnings, or a little consultancy for upwards of a year before you\u2019re generating enough revenue to pay yourself a reasonable wage or have raised a good level of funds.\u201d<\/p>\n Be prepared for investors to really scrutinise your claims and projections. It\u2019s crucial to have robust evidence and data to support your assertions, particularly regarding future performance. A well-prepared \u201cdeck room\u201d allows you to quickly and effectively provide this justification.<\/p>\n According to Matthew Louis, senior broker at AIN:\u00a0 \u201cif you say that you\u2019ll be 3x revenues in 2 years, what proof do you have and what can be shown to quantify those claims? Do the work and you can be confident when facing tough questions.\u201d<\/p>\n Understanding the current investment landscape within your specific industry is crucial. Direct engagement with established investors can provide invaluable insights into their current priorities and investment criteria. <\/p>\n This market research can significantly refine your fundraising strategy and increase your chances of success.<\/p>\n Louis says: \u201cIf you\u2019re a B2B SaaS, find out the HF\/FO\/VC that invests in your sort of business and find out what they are looking for? i.e. signed contracts or contract lengths, are they interested in current revenues or the projected run rate in a year etc.\u201d<\/p>\n Your pitch deck is often the first impression investors have of your company. A poorly formatted or error-ridden deck can immediately raise concerns and undermine your credibility, regardless of the strength of your business idea.<\/p>\n According to Addy Windsor-Clive, investment manager at Regenerate Ventures: \u201cA pitchdeck that isn\u2019t in a suitable format asking the typical questions a VC would ask is a red flag for me.\u201d<\/p>\n Maintaining resilience and mental well-being is crucial for navigating the ups and downs of fundraising. It\u2019s essential to have strategies in place to manage stress and maintain the energy required for this demanding process.<\/p>\n Our recent survey of startups globally found more than 50% admitted challenges with their mental health. Top tips from our members for coping with stress included sharing problems with family members and other founders, along with practicing mindfulness.<\/p>\n Investors rely on financial data to assess the viability and potential of a startup. Leaving financials out of your deck creates a significant information gap and will set the warning lights flashing.<\/p>\n According to Alexander Caparros, Senior Broker, AIN: \u201cPut some financials in the deck. If you\u2019re pre-revenue then put some forecasts in as it shows that you\u2019re looking forward and planning ahead. If you\u2019re post-revenue put some top line figures in.\u201d<\/p>\n He continues: \u201cIt doesn\u2019t matter if they\u2019re small but if they display consistent growth then it demonstrates progress. Investors will usually not even bother delving deeper if there aren\u2019t some kind of figures in the deck\u2026and don\u2019t ask for an NDA just to see a deck!\u201d<\/p>\n Xavier Ballester, Director of Angel Investment Network\u2019s broking division, adds: \u201cProjections are also good to show revenues vs net revenues vs EBITDA. Gives investors an idea of margins\/costs.\u201d<\/p>\n A common pitfall for startups seeking funding is relying on outdated valuation metrics. The investment landscape has shifted significantly, and valuations based on previous years\u2019 multipliers can be unrealistic and deter investors.<\/p>\n To put this into context, data from Crunchbase, global venture funding in 2024 reached close to $314 billion compared to $643 billion invested in 2021.<\/a> An almost 50% decline. <\/p>\n According to Louis:\u00a0 \u201cWe are in a much changed fundraising climate, but for many startups this message doesn\u2019t seem to have cut through. Something that may be 5\/6x in 2021 may only be 3\/4x now based on M&A sentiment.\u201d<\/p>\n As well as overvaluing your company, one of the quickest ways to deter potential investors is to ask for too much money, especially in the early stages. This can create the impression that the founders are out of touch with market realities.<\/p>\n According to Ballester: \u201cI have been advising startups to consider lowering their raise and valuation as optically that is working better at the moment. For instance, raising a \u00a31.5m Seed Round for let\u2019s say 20% is more likely to scare off investors.\u201d<\/p>\n He continues: \u201cRaising \u00a3750k for 20% and having a shorter runway will be easier. Hopefully that will still allow companies to gain more traction and for the funding environment to improve and then raise more at a larger valuation when times are better.\u201d<\/p>\n Savvy investors conduct thorough due diligence and will quickly uncover any discrepancies or exaggerations in your traction claims. It\u2019s crucial to present accurate and verifiable data to maintain trust and credibility.<\/p>\n For example if you are claiming you are on the brink of signing 2 large contracts with companies \u2013 have concrete proof. This is the sort of thing canny investors will immediately spot.<\/p>\n To maximise your chances of securing VC funding, it\u2019s crucial to approach them at the right stage of your startup\u2019s development. Going too early can diminish your chances of securing funding in the future.<\/p>\n According to Hailey Eustace, investor and founder of Commplicated: \u201cToo many founders start fundraising too early as they have been advised to build good relationships with VCs. But if you go to a VC too early, before you are ready to receive funding, you aren\u2019t investable and you could be blacklisted as \u201cnot relevant\u201d for their fund.\u201d<\/p>\n She continues: \u201cYou should start preparing for your fundraise six months before you plan to start approaching VCs. The more you prepare at the front end, the faster your raise will be.\u201d<\/p>\n The current fundraising environment demands a proactive and strategic approach. So start the year as you mean to carry on by implement these dos and don\u2019ts. Prepare thoroughly, and present a compelling case for your business. By doing so, you\u2019ll be well-positioned to attract the right investors and make 2025 the year of the angel for your business.<\/p>\n Looking for investment opportunities? Join us at\u00a0angel investment network<\/a>, where global investors meet the great businesses of tomorrow.<\/em><\/p>\n \t<\/div>\nthe dos<\/h4>\n
Do.. Make sure you are financially prepared in a tougher climate where fundraising may take longer than you think.\u00a0<\/h5>\n
Do\u2026 Build a full deck room and conduct internal assessments of where investor queries are likely to come from.<\/h5>\n
Do\u2026 Speak to large investors interested in your industry to find out what the internal sentiment is.\u00a0<\/h5>\n
Do\u2026 Make sure you check your deck properly \u2013 get fresh eyes to look at it \u2013 poorly formatted decks are always red flags.<\/h5>\n
Do\u2026 Focus on your mental health and resilience.\u00a0<\/h5>\n
THE DONT\u2019S<\/h4>\n
Don\u2019t\u2026Leave financials out of your deck.<\/h5>\n
Don\u2019t\u2026 value yourself based on multipliers of previous years when investing was more fluid.<\/h5>\n
Don\u2019t\u2026Scare off investors by asking for too much, too early.<\/h5>\n
Don\u2019t\u2026Exaggerate your traction. You will be found out<\/h5>\n
Don\u2019t.. seek VC funding too early. By going too early you risk alienating VCs in the longer term.<\/h5>\n