Raising millions of dollars for your start up seems great, but in reality, you are expected to perform and most importantly provide a positive return on investment for your investors. Anything short of this spells future disaster for you and your company.
Taking on this investment enables you to take your start up to the next level. It is an exciting, nerve-racking, stressful, and time-consuming process to close a round of financing, and if you can pull it off you better walk away feeling confident, not scared. The last thing you want to do is take someone’s money and doubt yourself if your company will actually succeed. I mean telling someone they are going to lose all their money is far more stressful than raising money will ever be. Overall try to never go there.
From my experience, I have found it much easier to talk with investors the minute my company started generating revenue. Revenue is your saving grace, and the conversations with investors post revenue is like day and night. There is just a whole lot less to argue about when money comes into the picture. It’s just like the good ol saying goes “Cash is King,” and this is certainly the case when raising money.
Here are three tips to raising money for your startup:
1. Raise money when you don’t have to
This may sound like an oxymoron, but it is the honest truth. It means your start up is generating enough money to grow organically. The money you are looking to raise is only meant to supercharge this growth. Not only will you have the upper hand when talking with investors, chances are you have the choice to select which investors you want to work with. From my experience, if investors hear that your start up is making money they will find you.
2. Its not about how much you raise, its about how much you earn
Realizing this will make you so much more successful in the long run. Why? It is the truth. Raising millions of dollars that does not belong to you is just that, money that does not belong to you. You want to be able to build a business that can sustain itself, prosper, and most importantly turn a profit. Profit is the name of the game, not dilution through fundraising.
3. Raise money to grow fast not sustain
The point of raising money is to supercharge the growth of your business. You want to have product market fit, customers, and a clear plan to use this money to make more money. The last thing you want to do is raise money to sustain your business. This process involves significant dilution, loss of trust, and loss of control. As an entrepreneur, you are in the business of working for yourself not someone else.
Picture Credit: We Heart It