How to raise venture capital
Angelica A.
June 8, 2020
  |  

How to raise venture capital

Angelica A.
June 8, 2020
  |  

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Raising venture capital can be so hard that most companies fail at it. Seriously! According to CB Insights, “nearly 67% of startups stall at some point in the VC process and fail to exit or raise follow-on funding.” That fact alone is a good enough reason for us to now focus on sharing our company’s experience with you aimed at how to raise venture capital. 

What is venture capital?

The term venture capital describes a private form of business funding for small companies, especially startups, that typically involves company equity. This financial backing provides long-term growth to a company, giving venture capitalists (or VCs, the name we give investors in this kind of business) a probable chance at making a sizable return on their investment. 

This kind of investment doesn’t solely have to be financial, however. There are tons of industry-specific expertise, business or tech advice, and non-monetary investment that can take place. 

And while VCs are either private personal investors or private firms with considerable business funding abilities, venture capital can also come from other kinds of institutions, such as financial ones or banks. We’ll describe other options on how to raise venture capital further below in this article. But first, let’s get one key aspect out of the way in this funding race. 

Channel your VC funding efforts

Essential in your search to raise funding for a startup or small business, is taking just the right amount of time to look for that investing party. If you spend too much time just trying to find investors, you might not notice fundamental areas for improvement in your offer, for example. 

Make sure you’re putting enough work on your company while also moving ahead with VC hunting. 

Now, let’s move on to another fundamental aspect of raising venture capital successfully.

Why traction matters

The majority of businesses only raise venture capital after having traction. Let’s say the word traction in business refers to a startup’s way of breaking the path to progress into measurable growth. And that can come through customers, financially, or through a diverse sort of proven momentum in a startup’s market relation. Worded easier, traction is your proof that there are consumers out there who care about your offer. Especially if a business achieved steady growth in revenue, traction is a safe selling point to raise funding. 

As hard as VC funds are hard to raise, coming up with an angel investor who will back you up on a prototype with few proven users is even more challenging. We’re not saying it’s impossible or unseen. Our CEO’s note on How to Find Investors for a Business with just an MVP proves otherwise. But, there’s an apparent reason why your traction is also translated into the traction slide being one of the Essential Elements of a Successful Pitch Deck

Most fundraising in VC hubs is happening when companies have traction and superb kinds of it at that. 

How do you get there when you still have to get the company off its starting feet? We got you. 

A note on bootstrapping

Bootstrapping is for the noble of heart. And it’s a popular way to start. We use this terminology to refer to companies that start with the funds that founders have in their pockets or little cash coming in from small successful sales. The fact here is that you’ve got no or very little outside funding. 

Slidebean bootstrapped for about 1.5 years back in 2013. Consulting part-time did the trick for our founding team in the meantime, for example. And then there was another way to gain a little traction.

Accelerator programs

We call accelerator programs that because their goal is literally to accelerate your company. They do so via a bit of capital to give you some air in areas that need development. 3-4 months is their usual duration, and, while most require you to relocate, some let you stay put where your business needs you. Some will also take a percentage out of it in the immediate term or as a simple agreement for future equity (what we know as SAFE.)

From bootstrapping, Slidebean went on to StartUp Chile, for example. There, the startup got $35,000 in a government grant that requested no equity. And that hasn’t been the only accelerator program in Slidebean’s experience list. DreamIt Ventures and $100,000 from the 500 Startups program are part of that list.  

Are accelerators wothAre Startup Accelerators Worth It?

Venture capital raising options

As you can see, the path towards raising venture capital can take many different directions. Though they sound like plenty, rest assured most startups are considering the same options you are. 

From contacting VCs directly, which makes of cold emailing the least profitable of returns, to walking up on stage during demo day after 3 months in an accelerator program to trying to secure funds in banking institutions, the truth to raising funds is that it requires your company already have an excelling team and a stable level of traction to attract VCs. 

Regardless of the option you choose, though, rest assured you’ll need to deliver a pretty impressive pitch about your startup if you want a follow-up call or meeting to happen. Even the most lenient of programs will require an excellent team and a great business idea before they can consider a startup for funding. 

The need for a perfect pitch deck

After helping thousands of startups create pitch decks, we believe we know a thing or two about what works and what doesn’t. In the end, the $800,000 seed round only came around for Slidebean after 142 hard rejections from investors. We like to say that learning the hard way can be golden when it comes to VC fundraising pitch decks. 

Now our team has grown to 25 members, a 7 digit figure in terms of revenue and much sought-after profitability. Not without much hard work, of course. 

The above is why we now tailor our services to suit startup and entrepreneurs’ needs in terms of pitch deck design. With what now is a golden team of business analysts coupled with knowledgeable and artistic design teams, we’re at the high-quality back-end with our consulting and design services

A pitch deck is a startup’s competitive presentation card. If you plan on raising funds for a company, your branded business presentation material needs to be at the top of your game. Flawless design with an engaging presentation on your part’s the only way to stand out between thousands of companies looking to make it. There are multiple reasons why a startup should rely on a design company. 

Primarily through COVID-19, now’s the time to build a top-notch pitch deck and financial model. In that sense, we couldn’t have you better covered. Start by getting a quote from us for a project, either per slide or for a full deck.

Don’t be fooled by success stories

We want to give you one last piece of advice before we go. We know how inspiring VC funding stories can be, and they’re undoubtedly great. However, the startup press commonly nurtures a false notion to new founders about fundraising. 

When a simple app or a product that looks easy to build manages to raise millions in a lucky seed round, entrepreneurs tend to assume that winning VC interest is an easy task to achieve. And part of making it through this considerable race for financial backing is knowing what a tough road this is. 

Please don’t let the media fool you into thinking this will be a jackpot-winning effort coming your way overnight. 

We recommend you best be prepared to face a long winding road to convince investors to fund your company. And if it turns out that your startup made it to the rare overnight unicorn with merit, then all the better! But it’s best to prepare for the strenuous work that lies ahead. 

Let’s work on your pitch deck