The beginnings of the later stage are faces major fundraising challenges, but early-stage investment is still a bright spot for startups until they hit the Series B rounds.
Traditional venture capital dollars are harder to come by these days, but institutional investors are still looking for smart investments, and industry watchers are hungry for the good news suggested by a new round of financing. While the market is uncertain, builders should be prepared to use their capital infusions as an asset beyond the cash it represents.
In any market environment, a fundraising event can act as a vote of confidence or validation from investors, supporting your company’s growth through talent acquisition and brand awareness. Regardless of the size of the round, securing external investment is an important milestone in many companies’ journeys, and it often takes a lot of effort. However, after putting in all the work, many founders make the mistake of allowing a funding opportunity to not get all the value they could.
Over the course of my 20+ years as a marketing leader at startups, venture capital firms and large tech companies, I’ve helped twelve companies announce funding news, from $1 million pre-seed rounds up to a $50 million raise.
Here’s my playbook for founders looking to make their “big money” opportunities go further:
Rethink assumptions about news gathering
Announcing the funding news allows you to create additional value beyond the capital investment by promoting your momentum and driving brand awareness.
Founders may overlook the value of announcing funding news for a number of reasons, but the biggest is thinking the round isn’t “big enough” to warrant attention. When you see other companies raising hundreds of millions of dollars, it’s easy to think that no one is interested in hearing about a much smaller round of your startup.
Fortunately, that is not true. While big numbers can draw more headlines, smaller rounds can still bring interest if the announcement is well executed and you can connect the news to some big industry/technology/social trend.
Another factor that founders doubt is whether all or part of the new capital is through debt investment. Although it is becoming more common, especially as VC investors pump in the breaks, there is some stigma around debt financing, and founders may worry that they will be penalized for adding debt to their balance sheets. .
However, securing a debt investment generally requires more rigor than an equity investment, so promoting a debt raise can reflect your business’s fundamentals and revenue numbers. enough to support the payment.
Founders may also be concerned about giving competitors too much information about their business and prefer to thrive while flying under the radar. There are benefits to hiding some information, but it’s important not to focus so much on building behind closed doors that you miss the opportunity to gain more insight into prospects and partners that will drive revenue. .
Finally, funding announcements are sometimes not at the top of a founder’s to-do list, mostly because they aren’t sure how to run an announcement or lack the marketing skills to execute effectively. this. This next section will help on that front.
Three steps to maximize the sales value of your collection
The future is unknown, so if you have a funding round locked up and cash in the bank, you have the opportunity to make the biggest impact you can with the news you have at hand.
To use this opportunity and be successful you must:
Step 1: Plan ahead
Preparing for a fundraising announcement takes time and strategic thinking. Once you’ve reached the point in your conversations with investors where term sheets are likely the next step, you should gather your marketing team to start working on a plan. This includes aligning with your investors early on about their ability to participate in a news announcement.
Some key questions your lead marketing should consider include:
- Who can offer public investment quotes or commentary?
- What are the key messages you want to communicate about this round and what messages do you want to extend to your investors?
- When will the investor be available to review the announcement materials and participate in potential media interviews?