Aim for These 7 Goals to Attract Investors
Yes, we genuinely understand—raising capital is never an easy task. As a founder, much of your valuable and limited time should go into thinking, strategising, and executing initiatives that allow you to build your venture properly, alongside keeping scary risks at bay, especially those that could affect your long-term prospects and viability.
Along the way, though, doubts, uncertainties, and unforeseen problems can plague your journey, which can lead to a dangerous impasse if not resolved immediately and correctly.
You’re likely already considering several options at the early stage and asking yourself whether you should adopt a particular fundraising tactic. The struggle is indeed real, and we’re here to help you figure out what you can do today to WIN in your capital raise, so you can start focusing on the one thing that really matters: growing your business.
Learning from the Experts
To get credible and experience-backed advice, we look to the experts. Wholesale Investor’s own Steve Torso recently sat down with Andrew Whitten, Principal at Automic Legal and a Founding Partner of Whittens Lawyers, known for being instrumental in the success of many businesses.
Their virtual fireside chat yielded actionable thoughts and ideas, all of which you can use to score a winning capital raise. Today, as one of our readers and subscribers, you get special access to these learnings—goals, as we’d like to call them.
Work towards these, for starters, and set yourself and your company’s growth up for great results!
The 7 Goals
Goal # 1 – Be a good (or a GREAT) founder.
According to Andrew Whitten, one of the elements of a successful capital raise is a good founder—this is essential. Why? Investors typically go for companies run and steered in the right, sensible direction by people they can trust. Not just with their money but also with their time, attention, and resources.
Today, good founders and some of the best CEOs have three common traits: strategic entrepreneurial vision, attention to detail, and determination.
A strategic entrepreneurial vision means the founder fully understands the business and its direction, possesses profound industry knowledge, and knows how to disrupt properly and initiate lasting change.
On the other hand, being attentive to details empowers business operations for the long term. It assures investors that the leaders exert proper control in all development stages, stay in touch with customers’ needs and wants, and understand their performance numbers across the board.
Determination brings these elements together. In many cases, being determined is synonymous with being resilient. One must be unflinching in the pursuit of excellence and show unwavering bravery in the face of challenges.
Goal # 2 – Founders (and CEOs!), Back Off!
Your business journey is akin to a chess game, according to Andrew Whitten. People are always trying to get your attention, and your focus often gets channeled to a massive number of to-dos. To remain strong on all fronts, you must learn to trust and delegate to your management team.
Those who have mastered this “art” can go into deep details while knowing when to “back off” and leave their teams to do the necessary decision-making, empowering them and their departments to function interdependently in the process. In this regard, being disciplined not only frees up your time but also strengthens the capabilities of your internal champions.
Goal # 3 – People, People, People.
This goal is related to the previous one. You will only be able to “back off” if you have the right people in place. The ideal hires should be in the correct spots, and you should learn to trust them once they’re there.
According to Steve Torso, it all starts with purposeful hiring. Know what skills you need in your team, and go for candidates who show competence and the right attitude—those you can trust with your vision. Having these people will be critical in the early stage (and even beyond!), as you’ll have to demonstrate your capabilities constantly to investors who are watching you and your company’s every step like a hawk.
You can expect that being under the “microscope” will be challenging, but having the best people on your board and team will make it easier, especially as your business scales.
Goal # 4 – Always Say NO to Micromanagement.
Let’s face it. Micromanagement can kill the productivity and progress of your business. It also can steal trust, break down confidence, and produce low levels of engagement, both internally and externally. No matter which angle you choose to look at them, these are ultimately disadvantageous for a growing venture.
Manage your people by output instead. Great leaders and organisations develop workflows and systems that allow their people to grow, function, and produce work to the best of their abilities without someone breathing down their necks and causing them to feel uncertainty. Remember, apart from you, these individuals are front liners.
Your investors need to see that you’re treating your team with importance to establish that you are cultivating good leadership within and around your company.
Goal # 5 – Work on Your Culture; It’s the Most Important Thing
Experts like Andrew Whitten like working with companies with good people and a good mission instead of companies that don’t do the right thing. In an age where every organisation is called upon to go “beyond business,” it is imperative that you show how you’re collectively working towards a bigger, more meaningful purpose.
Culture grounds everything; it sets how you and your people behave even in the most challenging times, speaking volumes to investors about how you can make your business thrive despite adversity.
Goal # 6 – Define (and Refine) Your Strategy
Strategies can indeed turn the tide of battle. The most significant wins come from campaigns running with a solid plan throughout history—and your capital raise can surely take inspiration from these.
When he’s helping to define a strategy, Andrew Whitten says he typically starts with the budget. He analyses the numbers, tests the budget assumptions, and determines the right amount to raise. These elements are important, according to him, as some founders raise too little.
When refining the strategy further, he advises founders (and CEOs) to revisit the time spent on the capital raise. If you’re perpetually capital-raising, say, as a result of losing money fast in each round, you are misspending your time on a substantial scale.
As part of senior management, you should work on your raise with the proper focus and resources, then spend 6-12 months building your business before doing your next round. Develop your strategy well, so you’re not constantly worrying about your bank balance and losing valuable time to develop your business.
Goal # 7 – Be the One Who Asks the Right Questions
According to Andrew Whitten (through personal examples), and as reinforced by Steve Torso, investors look at particular things in the proposals, reports, and plans you provide to them.
These include how your budget gets spent, which should be directly related to creating uplift and value. You must demonstrate that you can raise money at a higher level and design your capital structure well, cognisant of possible future valuation.
So, Which Type of Raise is Best for Me?
During the virtual fireside chat, Andrew Whitten shared that he prefers to do straight equity for early-stage venture capital efforts.
Suppose you have “big value” on the way, as in the case of a major contract or distribution agreement. In these instances, he mentions that SAFE notes are pretty popular, allowing you to raise your capital with a deferred valuation until a further point. These work well when you’ve got value “upwards” coming in the company, and you’re not sure when you’re raising the next round of capital.
Investors typically like SAFE notes because they put in money, but the valuation is determined only upon value creation. Often, these have a coupon attached like a convertible note. There is, almost always, a definite discount until the market sees the next value point.
Venture debt is also an option. If you are pursuing this, the key is to have a regular and reliable cash flow, allowing you to pay the interest without any hiccups.
Final Advice – Don’t Aim for the Buzzer-beater
Scoring a winning capital raise ultimately starts by getting the basics right. And it also springs from being aware of the most effective tactics and strategies you can employ at the early stage, allowing you to focus on the tasks that matter.
Simply put, don’t aim to play your best game only when problems arise or when you’re already closing your round.
Steve Torso says that “your competition is every other thing that investors can put their money into.” With this, your goal is to get things right initially and make a positive, lasting impression with your potential investors—one that sets you apart in the best way.
Tell, show, and demonstrate WHY they should choose YOU.
With a bit of help (and a ton of valuable insights) from experts like Andrew and Steve, you’re well on your way to improving your undertakings. We wish you all the best!
For more insightful content, please visit our CRIISP Media website
To watch the virtual fireside chat between Steve Torso and Andrew Whitten, please visit YouTube.