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.
- 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.
- 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)
- Check out more SaaS Expansion Benchmarks
- 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.
- 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).