Startups need capital. Especially those with big visions to grow quickly and disrupt the world. So, how do you get funded? If you are a founder gearing up for your first round of funding or even a business owner looking to fundraise in the future, this article is for you.
Navigating a round of funding is one of the most significant challenges a startup company has to face. It is a lengthy process which may or may not result in success. However, if your efforts are successful, all of the blood, sweat and tears are worth it as it gives you a chance to turn your dreams into reality.
Our Marketing Manager, Kaya Cheshire, recently caught up with Hannah Forbes, Founder of The Funding Crowd, a friendly crowdfunding consultancy backed by published academic research and extensive practical experience, to gain insight into the world of crowdfunding as we know it.
What’s the most common mistake you see businesses making when crowdfunding?
Assuming the crowd is going to invest when they don’t know your brand and/or business yet. You need to have the bigger investors up-front beforehand lined up and ensure you’re setting up those conversations properly. The crowd that invests will invest in smaller chunks, these investors are interested in certain crowdfunding campaigns already and have specific preferences.
It’s hugely important that you’re honest with your raise. Be up-front and transparent with people that you want to get involved with your numbers, metrics and valuation. Don’t forget to shout about wins.
What’s your golden rule for businesses fundraising?
Hands down, always be authentic and transparent. Be honest about your brand and what you do, while keeping potential investors engaged.
How important is social proof?
Incredibly important! You must have social proof to get anybody on board.
It’s important to note that social proof from three-sources are key: excited customers who love who you are and what you do, Industry experts who can vouch for you and say ‘this is the future’, and validations from previous investors - for example, ‘I invested in this business because of x,y, and z’.
How does PR slot in?
PR works well when it’s strategically done and is a key form of social proof, but needs to be the right publication.
Take Mintos for example, they just raised an incredible amount of money ($7-million to be exact), and their PR was basically an industry sound bubble! They were in all the right places being featured, all the tech spaces, a cool fresh start-up. I did not want to miss out because I’d seen this brand absolutely everywhere in publications from the moment they started to seek investment.
A bonus tip from all of us at WorkClub: focus, focus, focus. The most important thing is to have focus and to ensure no one lets you deviate from that focus. Zone-in on focus from everything from product roadmap to metrics. Every part of your organization should be aligned with your end story and goal. Focus on which metrics you measure, and having a complete understanding of the market and its nuances.