Ready, Set, Go! What you need to know about raising capital. Part 4: You’re Ready to Go!
What’s Inside?
- Rally the team – it’s time to get going
- Finalising the data room
- The official investor reach out
- Closing that deal!
- What’s next?
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Welcome back to part four of our what you need to know about raising capital series! In case you missed them, check out parts one, two, and three which focus on building good habits, putting in the key prep, and getting set up for a successful raise.
Now, we’re moving on and we are READY TO GO! Remember, Standard Ledger acts as fractional CFO for numerous startups, and we have helped clients raise more than $40m in the last 5 years, so as always, if we can help let us know!
1. Rally the team – it’s time to get going
Wow – fundraising takes a lot of time and effort. Attention can be diverted from the core business of selling and customer care, and the last thing you need is slowing sales or irritated customers right when you need everything looking its best.
Potential investors always want to deal with the founders, but along the way they’ll also want to meet your sales, marketing, development and finance teams too, so you’ll need to make sure everyone’s ready and on top of things. Deal momentum matters – expect to answer investors questions, fast – all while you’re still trying to maintain business as usual. Consider temporary extra resourcing, like bringing in external creatives for tasks such as pitch decks, teaser videos etc. We know this time is crucial, so when we are acting as a startups fractional CFO we usually lean in extra before, during and after capital raising to give that helping hand when it matters.
You’ll definitely need a good lawyer who has gone through raises – their advice and attention to detail will be invaluable, and don’t forget the availability of your Board to meet investors, discuss the deal terms, meet with lawyers and (hopefully) sign the final documents.
2. Finalising the data room?
Your team is assembled and ready, so now is the time to re-review all the information in your data room. Build out stage 2 data with the more changeable and interesting information, like the latest financial forecasts, metrics reports and board minutes – it’s crucial this is always kept up to date over the often months-long due diligence process.
Your investors will be wanting the updated latest reports, so end of month reporting needs to be tight.
And remember that first forecast you gave them at the start of the process? Investors will be watching and tracking that you’re hitting what you said you would. So make sure that advice we gave you way back in part two – ‘keep your forecasts detailed yet flexible, allowing room for adjustments as your business evolves’ – stayed on track.
3. The official investor reach out
Now the moment is finally here…you’ll actually reach out to those investors you’ve been tracking all this time and keeping warm. The fact you’ve been working hard on those relationships means this won’t (and shouldn’t) be too formal, but it does need to be professional. Check, check and check again all wording/links/grammar etc, everything needs to work. Get a fresh pair of eyes to check again once you have triple checked, now is not the time to relax and hope for the best.
The aim at this stage is typically to find a lead investor. Frustratingly (for founders) you can often face the ‘no-one wants to go first’ mentality. So once again, this is all about building rapport and finding the legend at the VC firm that ‘gets’ what you’re about, who believes in you AND the opportunity enough to want to put it forward to their investment committee.
When you’re in the position of having a term sheet, the lead investor sets the terms that other investors come in on, everyone in the round having the same deal.
If the lead investor hasn’t taken the full round this is your chance to say ‘ABC is in, how about you?’ to build out the rest of the round.
4. Closing that deal!
Any key terms should have been agreed in the term sheet – but invariably (again frustratingly for the founder) the devil in the legal detail can sometimes still drag out for weeks. Even when the founders and investors are in agreement, lawyers on both sides will take the time to make sure all the i’s are dotted and the t’s are crossed, legally.
It’s just a process that needs to be followed, and one that ends up with the final documents being sent typically electronically. Oh, and you made sure everyone that needed to sign was on standby, and not out of contact climbing a mountain on the other side of the world, right? (true story!)
And – after confirming the bank account details about 4 times – the joyful day arrives where you can take that screenshot of a very healthy looking bank balance. Yahoo!!!
What’s next?
You’ve finally seen the result of all that prep and organisation come to fruition, and got the outcome you rightfully deserve. Celebrate 🥳 – then get back to it and deliver what you said you would. Onwards and upwards!
At Standard Ledger, we understand the challenges and opportunities that come with raising capital for startups and innovative companies. Our team of experienced professionals is here to support you every step of the way, providing strategic financial advice and guidance to help you achieve your growth objectives. Get in touch with us today to learn how we can be your partners in growth.
Stay tuned for more in our Ready, Set, Go! series, as we take you through to the last stage in the capital raising journey – the post-raise phase.
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