What they don’t tell you about capital raising

Successfully raising venture capital is a goal for many business founders. An influx of cash can be vital not only to growth, but also liquidity and maintaining day-to-day operations. However, whilst many focus on the outcome of getting the capital, it is important not to forget the downsides, pitfalls, and challenges that are underway before a raise is completed.
 
Selling too much

One of the pitfalls experienced by young startups in early funding rounds is often rushing too quickly to raise capital, without a track record of operations and some sales. Seeking venture capital as early as possible may not always be in the best interest of the entrepreneur, as with no track record, the company’s valuation will be lower, and therefore the percentage of the company to sell will be bigger.

Growth challenge

In between of the funding rounds, there will inevitably be an expectation of growth in order to generate the returns anticipated by investors. Remember, venture capital companies are in the business of making a return on their investment; act accordingly.
Time & Effort required

Raising money is not just preparing a pitch deck and outreach; part of the process, investors will often engage in due diligence examinations of the founder as well as the business, including review of the past performance, financial statements, and more. Getting a ‘Yes’ can easily take six months; a ‘No’ can take up to a year. If you’re currently preparing for your next capital raise, get in touch with our team to check in whether you have everything you need to get started and be set for success. Part of our mission we’re here to help founders make connections to make finding the right investor easier, and make capital raising simpler.  

Best,

Contact Daniel Hallawi


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