It is crucial to run a well-structured process to successfully raise funds. The process has similarities with B2B sales or an M&A process, but with some special characteristics that are crucial to understand. Here are the phases you want to follow, and the estimated time it takes to get it done:
Make sure your company is in good shape before starting the fundraise. In this phase you will prepare for the things that investors care for most: Team, product, market and traction. Depending on where you stand, this phase can be skipped – or take several months.
Somewhat paradoxically you don’t start with the question: “How much money do I need over the coming 24 months?”, but rather “How much money does my current valuation allow me to raise?” We will support you to get this right. This process can be done within 1 week.
Once you know how much you want to raise you need to work out a solid plan. You want to triple the valuation of your company over the coming 24 months. Setting up this plan takes 1-3 weeks.
Now is the time to present your plan to a few external investors and existing shareholders. You need radically open and direct feedback, and iterate until you are confident that the financing round will close. This phase takes 2-4 weeks.
Interested investors will need various insights until they take a final decision. In this phase you elaborate everything needed to execute at speed when you go out. This phase takes 1-2 weeks.
Many founders are not able to close the round quickly because they don’t talk to enough investors. In this phase we will discuss fundraising psychology, and create a great long list. This will take 1 week.
In this phase you will schedule 50+ investor calls, and go into a due diligence process with 20+ of them. Your objective is to get to phase 8 asap. This typically takes 4-8 weeks.
The power balance shifts from investors over to you once you receive first signed term sheets. This is the best part: Create FOMO and choose the best investors. This phase takes 1-4 weeks.
This phase requires a solid data room, a good lawyer and some time-consuming negotiations. But thanks to high investor interest you are well positioned to have the money on your account within 4-6 weeks. Celebrate!
Most inexperienced founders make severe management mistakes after funding rounds. We will discuss these. And we will make sure that potentially needed further financing will be easy.