Money, money, money. It’s a popular topic, especially amongst entrepreneurs that are out looking for funding for their startup. After talking to hundreds of entrepreneurs, personally trying to raising money several times, and investing in dozens of startups (directly through Atlanta Ventures and Shotput Ventures) I’ve learned 17 things entrepreneurs need to know when fundraising:
- Recognize the metrics required to raise a Series A
- Fewer entrepreneurs raise Series A rounds than people win million dollar lotteries each year
- Raising angel money is very different from venture money
- Answer these 8 metrics questions to raise a Series A
- For every 1,000 venture-backed startups, less than 20 sell for $100 million or more
- Remember that the value multiplier to raise money is 5x
- Ensure that it’s a 10x business model
- Know that terms are just as important as valuation
- Think IPO roadshow when raising a venture round
- Determine the desired percentage of the company to sell
- Raising money doesn’t equal product/market fit
- Add 10 – 15% more dilution to each round
- Make the funding last 18 months
- Build investor relationships well before they are needed
- Valuations are higher at launch before limited metrics are available
- Fundraising is a full-time job
- Create a competitive fundraising process
Finally, entrepreneurs need to know that raising money isn’t a given. Many try, most fail. Follow these 17 pieces of advice and better understand the fundraising process.
What else? What are some more things entrepreneurs need to know about fundraising?
David Cummings on Startups 