{"id":5935,"date":"2022-09-01T08:51:50","date_gmt":"2022-09-01T08:51:50","guid":{"rendered":"https:\/\/ethis.co\/blog\/?p=5935"},"modified":"2022-10-18T06:48:19","modified_gmt":"2022-10-18T06:48:19","slug":"3-things-to-do-before-a-fundraising-round-for-early-stage-companies","status":"publish","type":"post","link":"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/","title":{"rendered":"3 Things To Do Before A Fundraising Round For Early Stage Companies"},"content":{"rendered":"\n<p>Inevitably, your business will eventually need funding to grow unless you are incredibly wealthy or have well-stocked business partners. For early-stage companies, it\u2019s normal to need a steady cash flow to sustain the day-to-day functions of your business.<\/p>\n\n\n\n<p>Though a thrilling experience, fundraising is also known to be an eternal challenge for startups, particularly early-stage startups where the founders may not have the experience doing it.<\/p>\n\n\n\n<p>Founders need to dedicate a tremendous amount of time and energy to ensure that the company secures the necessary funds all remaining level-headed throughout the pitching process.<\/p>\n\n\n\n<p>Not sure where to start? In this article, we\u2019ve compiled a list of some business fundraising channels you can take advantage of. This article assumes that you have already decided to seek out investors or venture capitalists as a new funding source and address the necessary preparations beforehand.<\/p>\n\n\n\n<p><strong>Related:<\/strong> <a href=\"https:\/\/ethis.co\/blog\/3-reasons-why-you-should-digitalise-your-business\/\">3 Reasons Why You Should Digitalise Your Business<\/a><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_51_1 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\" role=\"button\"><label for=\"item-69e773cb963be\" ><span class=\"\"><span style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input aria-label=\"Toggle\" aria-label=\"item-69e773cb963be\"  type=\"checkbox\" id=\"item-69e773cb963be\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/#1_Prepare_a_pitch_deck\" title=\"1.&nbsp;&nbsp; Prepare a pitch deck\">1.&nbsp;&nbsp; Prepare a pitch deck<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/#Problem_statement\" title=\"Problem statement\">Problem statement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/#Target_market\" title=\"Target market\">Target market<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/#Business_plan\" title=\"Business plan\">Business plan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/#Competition\" title=\"Competition\">Competition<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/#Traction\" title=\"Traction\">Traction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/#Financials\" title=\"Financials\">Financials<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/#Investment_funding\" title=\"Investment funding\">Investment funding<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/#2_Research_your_potential_investors\" title=\"2. Research your potential investors\">2. Research your potential investors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/#3_Plan_for_the_future\" title=\"3. Plan for the future\">3. Plan for the future<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/#All_things_considered\" title=\"All things considered\">All things considered<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"1_Prepare_a_pitch_deck\"><\/span>1.&nbsp;&nbsp; Prepare a pitch deck<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"536\" src=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2022\/09\/Preparing-pitch-deck-1024x536.png\" alt=\"\" class=\"wp-image-5938\" srcset=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2022\/09\/Preparing-pitch-deck-1024x536.png 1024w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2022\/09\/Preparing-pitch-deck-300x157.png 300w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2022\/09\/Preparing-pitch-deck-768x402.png 768w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2022\/09\/Preparing-pitch-deck.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>It is one of the most important\u2014if not the most important\u2014fundraising materials that you need to prepare before a fundraiser.<\/p>\n\n\n\n<p>Potential investors will refer to your pitch deck to get a summary of who and what your company is all about. You can probably search for a template online, but a pitch deck contains the following things:<\/p>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Problem_statement\"><\/span>Problem statement<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Typically, a problem statement should be condensed into one or two sentences that clearly define what your business is seeking to improve. Good questions to ask include: What problem (s) is your business supposed to solve? How does it assist your customers? But don&#8217;t forget to include the solution to the problem statement.<\/p>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Target_market\"><\/span>Target market<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Knowing who your customers are, particularly the demographics, psychographics, intentions, and interest, among other things, are crucial to the success of your business.<\/p>\n\n\n\n<p>A good place to start is to create a Venn diagram consisting of the Total Available Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM) of your business.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>TAM<\/strong><\/td><td>The total market demand for a product or service.<\/td><\/tr><tr><td><strong>SAM<\/strong><\/td><td>Is also known as the segment of the TAM targeted by your products and services that is within your geographical reach.<\/td><\/tr><tr><td><strong>SOM<\/strong><\/td><td>This is the portion of SAM that you can capture within the realistic capabilities of your business.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Business_plan\"><\/span>Business plan<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>You\u2019ll need a business plan to spell out the company&#8217;s core business activities and how it plans to achieve its goals.<\/p>\n\n\n\n<p>Externally, this is information is crucial to get your company off the ground and attract outside investors. Internally, a business plan can be used as a guide to ensure the executive team is aligned and focused on and working toward short- and long-term objectives. It can include your moonshot goals, but there should be realistic goals too.<\/p>\n\n\n\n<p>A comprehensive business plan should include an executive summary and sections on products and services, marketing and sales strategy and analysis, financial planning, a budget, the business strategy, and your customer segments and persona.<\/p>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Competition\"><\/span>Competition<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Is your business the only one within your geographical area? Who are your direct and indirect competitors?<\/p>\n\n\n\n<p>Ensure you\u2019ve done comprehensive competition research for your pitch deck, as it\u2019s important to know how your business and products are different from the crowd. Knowing your competitors and your unique selling points will save you a lot of headaches when securing your potential customers.<\/p>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Traction\"><\/span>Traction<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If your business has been around for a while, it\u2019s good to show your company\u2019s track record to convince investors that you have already delivered results in the past.<\/p>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Financials\"><\/span>Financials<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>At an initial pitch, a brief overview of the business\u2019 financials should be included in your pitch. This can be used to demonstrate the business\u2019 burn rate. Once the investor (s) is keen to invest, the details can be discussed further.<\/p>\n\n\n\n<h3><span class=\"ez-toc-section\" id=\"Investment_funding\"><\/span>Investment funding<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>When presenting to any investor, make sure to clearly state the amount requested as well as the equity stake that will be given in exchange.<\/p>\n\n\n\n<p>Lastly, include a summary of the team that you have working with you. This is important because having the correct combination of skills and personalities within your founding members can potentially make or break the business.<\/p>\n\n\n\n<p><strong>Related:<\/strong> <a href=\"https:\/\/ethis.co\/blog\/islamic-venture-capital-via-crowdfunding\/\">Islamic Venture Capital via Crowdfunding: A New Approach<\/a><\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"2_Research_your_potential_investors\"><\/span>2. Research your potential investors<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"536\" src=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2022\/09\/Potential-investors-1024x536.png\" alt=\"\" class=\"wp-image-5940\" srcset=\"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2022\/09\/Potential-investors-1024x536.png 1024w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2022\/09\/Potential-investors-300x157.png 300w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2022\/09\/Potential-investors-768x402.png 768w, https:\/\/ethis.co\/blog\/wp-content\/uploads\/2022\/09\/Potential-investors.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Though you are seeking investors, you shouldn\u2019t just accept any investors. Be sure to filter through the list of investors that you are shortlisting, and make sure you don\u2019t ignore obvious red flags in your potential investors.<\/p>\n\n\n\n<p>Because new investors will have a stake in your business, it is important to know who are the investors that you plan to pitch to, and are aligned with their values seeing how you will have to contend with their opinions and demands. You don\u2019t want it to be a thorn in your side if the business is managed ineffectively. That\u2019s why finding a suitable investor with similar views is paramount to the future success of your business.<\/p>\n\n\n\n<p>But as the founder, you will likely keep a majority equity stake in the company so that you can set the direction that your business will take to grow in the future.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"3_Plan_for_the_future\"><\/span>3. Plan for the future<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Many investors invest in businesses not necessarily for what they\u2019ve achieved but for the potential and growth they that could have.<\/p>\n\n\n\n<p>As a business owner, you need to have a long hard think about what you hope to achieve in the long run, and more immediately,&nbsp; what you\u2019d like to deliver with the money that you receive from that round of investment. Then you\u2019ll need to communicate that, along with the ROI, to your investors.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"All_things_considered\"><\/span>All things considered<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>These three points are not the exhaustive list of all the things that you should prepare before a fundraising round. Rather, it is the few important elements that you should think about and consider.<\/p>\n\n\n\n<p>Of course, don\u2019t forget to do a test run of your presentation and also anticipate any possible questions. Most importantly, don\u2019t be discouraged by any negative feedback but see it as a learning experience.<\/p>\n<div class=\"rns\" data-title=\"3 Things To Do Before A Fundraising Round For Early Stage Companies\" data-tags=\"\" data-categories=\"Entrepreneurship\" data-comments=\"0\" data-date=\"1662022310000\" data-author=\"Cindy Banun\" data-single=\"\" data-url=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/\"><\/div> <!-- Check out https:\/\/reactandshare.com -->","protected":false},"excerpt":{"rendered":"<p>Inevitably, your business will eventually need funding to grow unless you are incredibly wealthy or have well-stocked business partners. For early-stage companies, it\u2019s normal to &hellip; <span class=\"read-more-link\"><a class=\"read-more\" href=\"https:\/\/ethis.co\/blog\/3-things-to-do-before-a-fundraising-round-for-early-stage-companies\/\">Read More &rsaquo;<\/a><\/span><\/p>\n","protected":false},"author":75,"featured_media":5942,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":""},"categories":[2074],"tags":[],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/ethis.co\/blog\/wp-content\/uploads\/2022\/09\/3-things-to-do-before-funding-round-1.png","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbDwgm-1xJ","_links":{"self":[{"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/posts\/5935"}],"collection":[{"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/users\/75"}],"replies":[{"embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/comments?post=5935"}],"version-history":[{"count":2,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/posts\/5935\/revisions"}],"predecessor-version":[{"id":6043,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/posts\/5935\/revisions\/6043"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/media\/5942"}],"wp:attachment":[{"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/media?parent=5935"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/categories?post=5935"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ethis.co\/blog\/wp-json\/wp\/v2\/tags?post=5935"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}