Most entrepreneurs who are pushing through the start-up phase of their new businesses can break out in sweats and become short of breath when they think about the possibility of running out of operating capital. The panic that can set in with rounds of Series A funding is almost unexplainable to anyone how hasn’t been through it. There are a few things that make the process and easier, less anxiety-fueling and more successful.
- Build a Team of All Stars
Resist the urge to hire all of your friends and family members. Just because Cousin Jeff needs a job doesn’t mean that you have to be the one to hire him. Your college roommate may be a lot of fun but that doesn’t mean that she is qualified to work at your company. You have to show that you are making quality hiring decisions if you want to impress investors.
If you are a tech start-up, try to fill your team with people who have experience with companies like Microsoft or Apple. If you are starting a new restaurant, hire a chef that has been a James Beard finalist. If you are able to attract top-level talent, you will be able to attract top-level investors.
- Show that You Have an Immediate Need
Investors love to join companies that have orders rolling in. If you can show that you have more orders than you have the capacity to fill on-time, investors will likely jump in and infuse the capital you need to expand your production and/or inventory.
- Don’t Look Desperate (just don’t)
Desperation is not attractive for anyone, especially not for people who are thinking of putting their hard earned money into your business. Create an environment where there are several investors who are considering your company as an investment opportunity and you will be able to play investors against each other. However, you must be committed to walking away from a deal that does not meet your needs. If you are not truly willing to get up and walk out of the nearest exit, this strategy will not work.
- Choose the Right Investor to Marry
You won’t actually marry your angel investor but, because an investment relationship is a lot like a marriage, you need to make sure you are as careful in selecting an investor for your company. You will spend a lot of time with them and you need to make sure that you have the same expectation and similar corporate philosophies. Do your research before entering into any investment agreement and make a list of the characteristics that are important to you and the characteristics you want to avoid in a potential investment partner.
- Don’t Do This Alone
There is simply too much work to be done by one person. You absolutely must have at least one competent person that you can trust to assist you with completing investment related tasks. This person should be capable of completing a variety of duties including keeping up with legal documents, ensuring all communications and requests from potential investors have been answered and keeping you on schedule.
- Shorten Your Fundraising Window
The Institutional Investment community is a very small and most investors know each other. In order to keep information from leaking out, it is imperative that you have a very short fundraising window.
- Be Prepared for More Challenging Interviews
Series A funding most often comes from established institutional investors who are more financially involved that most angel investors. You should be fully prepared to answer much more in-depth and detailed oriented questions that you dealt with when trying to secure initial funding from angel investors. You absolutely must be on your game in order to win at the Series A funding game.