capital

3 Articles About Raising Capital

The most important task in the early life of a start-up is securing enough funding to survive. Getting funding means getting cash.

But what are the expectations of the people you’re asking for cash? Here is a summary and links to 3 articles about raising capital.

Show Me the Money! Best Practices for Raising Capital for Your Startup

  • You’re asking people to give you money to fund your business. Be ready to answer why you need it and why your company can use the money better than someone else.
  • Using a visual aid during a pitch helps investors understand and remember your pitch. They see dozens or hundreds of pitches, so being memorable is critical. 
  • Jeffrey Hayzlett’s 118: When you’re making a pitch, use 8 seconds to grab people’s attention and 110 to win them over.

What Does It Take To Raise Your Next Round in 2018?

  • If you want to be considered a SaaS company (and grab the valuation that comes with it), your revenue should be 80%+ subscription/recurring (i.e., 20% or less service revenue)
  • Seed rounds are growing in size. More seed funding is affecting the maturity level of companies at later funding rounds–they are more mature than in past years.
  • Year-over-year revenue growth is the most important factor influencing the amount of funds raised. Companies growing faster than the median get significant funding premiums.

What does it take to raise capital, in SaaS, in 2018?

  • No VC investor interviewed would consider a Series A or B investment in a company with year-over-year ARR growth under 2X.
  • Seed investors value the presence of a strong technical co-founder over product-market fit, paying customer base, or revenue.
  • This is Part 1 of a 3-part article (the other 2 parts can be accessed through the link).

Happy raising!

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