Founders, what fundraising tricks are you missing?
Although founders spend an inordinate amount of time raising capital, most spend very little researching and deciding on a fundraising strategy. While they're busy sending emails and LinkedIn requests to random investors, many are missing opportunities that could make the whole process much easier.
When I hear founders talking about how hard it is to raise capital, there's often a caveat:
"Of course, it's almost impossible to raise funding when you're [in hardware/in Europe/in Asia/medtech/deep tech/not deep tech/B2B/B2C/black/white/female/LGBTQ/old/young...]"
Of course specifics make a huge difference, but the truth is that, unless your startup is growing consistently at 10% week-on-week, it is VERY difficult (if not impossible) to raise external funding. This is especially true once you've progressed past friends-and-family rounds, no matter who you are.
...So it's more important than ever to leverage every possible angle available to you.
Here are some examples:
Research government support, grants and funding schemes
If you're in the UK, make sure you've applied for SEIS/EIS. This makes a MASSIVE difference to angel investors, as it provides tax savings and reduces potential losses by up to 75%. There are also SEIS/EIS funds, which are actively looking for deals with "advance assurance". Amazingly, I've spoken with several UK-based founders recently, who were complaining how hard it is to raise money, but who hadn't even looked into SEIS. (One of our DQ portfolio companies has, and has reached £175K of a ~£200K raise in a few weeks.)
Consider geo-political issues
Similarly, my DQ partners and I just returned from Singapore, where the funding landscape is changing at lightning speed. Billions of dollars-worth of foreign capital is finding its way into the country, mostly in the form of family offices. I discovered that, in some cases, these family offices are encouraged/incentivised to invest in local businesses, as part of the process of moving their capital. If you're a startup in Singapore, find out what you need to do to qualify.
Leverage your immediate network
Another example: the stats show your best chance of raising investment, if you're an early-stage business, is raising from your network. Have you met EVERYONE you know who is somehow attached to the startup world? Have you asked for intro's? Forget cold emailing people like me on LinkedIn. Working your close network is your best use of time.
No matter where you are in the world, it's likely there are trends, government initiatives, grants, or other ways to give your business a greater-than-average chance of accessing capital. In my experience, founders are particularly poor at finding or even looking for these opportunities.
Funding is slowing down, no doubt, but we're going to read dozens of announcements from startups who raised successfully in 2023 thanks to tactics like these. Make sure you're not one of them.
Godspeed!
Image credit
– Featured image from Pixabay.