Would you like to know exactly what investors expect in terms of fundraising materials so you can be prepared to meet prospective investors with confidence and peace of mind?
The problem is that most Impact Founders and CEOs think that if they did a lot of the formative work in terms of infrastructure for their business already, they’re capital ready. However, if it was that simple, many more people would find the right capital for their business. Oftentimes, they don’t know what they don’t know about what it takes to be ready to raise funds. So if you are preparing to raise capital, there’s some things you’ll need to support a successful fundraising process.
When we tell impact founders and CEOs who are raising capital for the first time what they actually need to successfully get funded, they often react with surprise, as if it’s more than they would have imagined. Having been in the impact finance world for over 20 years, we can tell you that a pitch deck is not enough. A pitch deck might raise you some money from friends and family, who are not really going through a due diligence process, but mostly investing in you as the founder, not necessarily in the business model or any of the other aspects of the business.
First and foremost, you need to have certain milestones of achievement within your company prior to going out for capital. There are a whole bunch of predispositions in terms of going out to raise funds in addition to defining the kind of funds you are seeking.
- Is this first money, like friends and family, or is this a crowdfunding effort to essentially pre-sell your product?
- Is this to go out for a more formal round of capital where you’re going to approach angel groups and angel networks, high net worth individuals and family offices?
- Is this an even more advanced stage of capital where you’re going out for a Series A equity round with a venture capital group or a private equity fund of some nature or an impact fund?
Regardless of the stage of capital being sought, a range of basic marketing materials are required to be successful.
Some of these materials include:
- One-Pager or Executive Summary
- Pitch Deck
- Pro Forma Financial Model
- Market Research (TAM, SAM, SOM)
- MVP – Minimum Viable Product or Prototype
- Due Diligence Package
Unless you’ve successfully raised millions of dollars in the past and the investors know you as a highly successful entrepreneur, these documents are all part of the funding process and they all take specific skills to put them together.
Of course, as important as your business narrative, is an understanding of your business model, which is typically articulated in the form of a Pro Forma Financial Model. The Pro Forma Financial Model is your financial projections, and if you’ve ever put together a Pro Forma Financial Model, you know that it has an immense amount of intelligence built into it.
It’s not just a spreadsheet with some numbers thrown at it, but represents all the critical thinking and all the critical strategies of your business, integrated into a set of financial projections. This includes everything from product strategy to go-to-market strategy, operating strategies and capital strategies. Because ultimately what comes out of that Pro Forma Financial Model is an idea of exactly how much capital you’re going to need for each stage that the business is going to go through. Pro Forma implies presenting financial projections in a standardized form. It’s looking out into the future.
If you are at the stage of preparing to raise capital, we invite you to assess what you have and what you may need to put together according to the list of essential fundraising materials.
As you can imagine, there is a lot of work that takes place prior to creating each of these documents and it’s not just about getting it done. It’s about having done the right amount of research and preparation to make these documents ready for investors to review and meet the demands of due diligence.
Want to get prepared to raise capital successfully?
Download our Free Fundraising Checklist Here: https://thechangeagenthub.net/fundraising-checklist
Once you receive the checklist you’ll be redirected to a video walkthrough so you can use this checklist most effectively. And you’ll also be invited to check out our 9-step fundraising preparation roadmap with detailed information called Impact Incubator Immersion. This program is the exact process all our impact clients have used to raise capital successfully.
