HOW TO SPEND IT — PART 9

Would Funding Advice and Training Help Us?

How startups prepare best for funding

Photo by Shane on Unsplash

Startup financing has become an industry where standards and rules apply. Different phases have different requirements. This time I will focus on early stage financing.

Raising capital is a learning process that takes some time

Having an idea, pitching it to an investor, and getting capital right away is more like a plot for a cheap TV production than a real-life experience. Reality looks different. Every startup founder and every company that wants to raise money needs to learn the rules of the game and how to compete and win.

It is a form of marketing. Instead of presenting your products and services, you polish your company and put it in the best light.

To master this challenge, we need to understand the logic of the game, the needs, pains and tasks of the investors. Yes, it is similar to gaining a deep understanding of customers before starting to develop a product.

The world of investors

There are different types of investors, and their worlds are diverse. The most professionalized and standardized are Venture Capital firms (VCs). Financing and exiting companies is their business. They rely on clear metrics, and investments are a matter of calculation. When startups are taken on by a large VC firm, they may experience a lot of support and are constantly challenged. When talking to them, startups need to be perfectly prepared. Wasting a VC’s time is not an option.

The 4 F’s, a disrespectful term for Founders, Fools, Friends and Family, all have a very personal connection to the startup, its team and its purpose. On the other hand, they usually have little money to invest. They are typically the first investors. Trust is the connecting factor here. Honest behavior that expresses the need for money, the intention, the chances of profit, but…