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Choosing the right moment to fundraise


As an accelerator co-lead and startup coach, there is one question in particular that I get asked a lot by the many founders I meet every week.
“When is the right time to fundraise?” 
Frankly, the current state of the world has made this question increasingly difficult to answer.

In spring of 2020, most VCs hit the pause button on new investments and focus was moved to the startups already in the portfolio. That made the answer to when to fundraise easy: “Not now”.

In September, that changed. Since then, VCs have been catching up and making more investments than ever. Q3 has seen a 40% increase in Global VC funding!

So you might be thinking, “Okay, now is the time, then. If VCs are investing more across the board, chances are good for me!”
Slow down, don’t get ahead of yourself.

The increased investment rate does not change the fact that you need to choose your time wisely. Fundraising requires a large time investment on your end, time that could be put into getting more customers or building and improving your product.

The other essential thing is planning exactly how you’ll spend the cash you have right now. Raising your funds in 3 months will make you invest in a completely different way than if you raise in 12 months. 💭

That means if you want to be successful, you need to be sure fundraising will go well before you even start. A failed round of fundraising can actually put an end to your startup!

Fundraising is not something you just wake up one day and do. It’s not a spur of the moment decision. You don’t go 0-60 km/h without all the acceleration between. You need momentum!

Having momentum means having increasing sales or number of users. It means signing a big new partnership deal. It means graduating from an accelerator… 

Investors do not want to carry you to the finish line. They want to join you for the rest of the journey. The key is to give investors the feeling that things are moving forward quickly, because that is how they will be confident about getting a return on investment in your startup.

Ask yourself: “Why do I want to fundraise?” If the answer is “I need capital,” you’re not ready! It may seem counterintuitive, because the point of fundraising is to… raise funds? But early stage investors are not charities. They add fuel to the engine of your already running startup. They don’t get behind a broken down car and push…

That can be tough to hear when you really need a capital injection. Maybe that capital is the difference between staying afloat and going under for you. But if cash is the only thing standing between your startup and success, there may be bigger problems.

As I’m sure you know, this has been a really tough year for startup founders. Among the applicants to the Fast Track Malmo accelerator, we see many founders who have had their growth slashed. Many of the startups in the travel, event, or hospitality industries should have seen their growth boosted by 10x this year… but it simply hasn’t happened.

We would love to help, and we truly feel empathy for those in this tough situation.

My best recommendation to you is to stay low, do what you can to stay afloat. Prepare so that when there is a light in the tunnel, and interest from customers is picking up, you go out and fundraise! 🚀

I always recommend founders to start preparing 6-12 months in advance for raising a seed round! Which means lots of documents to put in place, finding the  right investors and preparing for the meetings

Do you feel like not wasting your valuable hours of work to put together these tedious documents?
And… Do you want to feel confident and calm when the documents you have sent are according to the current investor standards?
Then I’ve got just the thing for you! 🎉😃
For founders just like you, I’ve put together the Investment Package.

It contains all the fill-in-the-blanks templates you need: Your long pitch deck, financial plan, metrics and market sizing calculation! To top it off you will also get investor meeting and valuation-negotiation scripts and mock-up videos that are totally unique and cannot be found online! 😊

So you can put together your documents in an afternoon, rather over an entire week!

Join Startup Action Incubator for only 1€ and read more about the package by clicking here

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About the Author: 

Melinda Elmborg was a Venture Capital Investor at the French VC firm Daphni. To help founders build, grow and raise capital to their startups, she switched careers to become a startup coach. In 2018, she started Startup Action. 

Based on her learnings, she has developed The Startup Action Framework that guides startups from launch to exponential growth.

So far, over 400 founders have already joined one of her workshops and thousands of founders have taken advantage of her templates and guides to succeed with their startup.

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