Preparing for investor funding rounds is a critical milestone in the journey of any startup. However, to capture investor interest and enhance the chances of success, startups need thorough and far-sighted preparation. Below, Emakase wants to share some key insights for startup founders to consider:
1. Understand Yourself and Your project
Before considering raising funds from institutional investors, startup founders should delve into key considerations, including:
- Why do we need funding? Consider whether raising capital aligns with the startup's current needs. A clear understanding of the "Why" behind the story boosts confidence and provides motivation for action.
- Is investment the best strategy for our startup at this stage? Apart from fundraising, startups have other strategic choices worth considering.
- Are we mentally and resourcefully prepared for fundraising? Raising investment is a long-haul journey that requires significant mental, human, and financial resources. Lack of readiness may lead to more losses than gains.
2. Prepare Fundraising Documents
The startup ecosystem in Vietnam, particularly the investment landscape, is relatively young and requires further development in terms of knowledge and experience from various stakeholders. Therefore, the process of seeking investors (or investors seeking startups to invest) and fundraising, as well as the evaluation process, need improvement.
Typically, for early-stage startups, the fundraising documentation includes:
- Pitch deck: A concise summary of the project, including essential information such as the business model, target market, team, development plan, and fundraising needs.
- Financial reports: Providing information on the company's financial situation, including revenue, expenses, profit, and cash flow.
- Financial forecasts: Presenting projected revenue, expenses, and profit based on the development plan.
- Legal documents: Preparing all relevant legal documents related to the company's operations, including business licenses, company charters, shareholder agreements, etc.
During the actual review process, discrepancies in the depth and accuracy of information may differ from the founders' expectations. Therefore, seeking support from individuals or entities with genuine understanding and experience in preparing documents is crucial.
3. Trategize Your Fundraising
Raising investment is a serious endeavor that requires careful planning. Therefore, it is essential to develop a clear plan for each fundraising round. Here are some suggestions:
- Establish a timeframe for fundraising: Start by outlining how long you intend to raise funds, the necessary steps, and their respective timelines. Consider the company's current cash flow when planning the timeframe.
- Prepare a suitable fundraising structure: Preparing a suitable fundraising structure beforehand allows founders to negotiate with investors more effectively, minimize uncertainties, and optimize time.
- Identify suitable investors: Begin by identifying the type of investors that align with the project's development stage and needs. Then, gather information about potential investors.
- Set milestones and checkpoints: Define critical milestones in the fundraising journey with specific timelines. This approach allows for appropriate adjustments during the fundraising process.
In summary, Emakase emphasizes to startup founders that fundraising is a process that requires meticulous preparation and continuous effort. By equipping themselves with the necessary knowledge and skills, startups can increase their chances of success and turn their entrepreneurial dreams into reality.
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