How much capital should be raised for the next investment round?
SOME NOTES ON STARTUPS NEED TO PREPARE WHEN SENDING CAPITAL.
When approaching raising capital, investors will often be interested in certain issues when looking at the business plan of startups such as profit (Income), profit margin (Margin Profit), and costs. capital (CapEx – Capital Expenditure). But besides that and equally important, investors will need to know real, relevant data on cash-ins, cash-outs, and projected milestones. company’s vision for the future.
In a nutshell, venture capitalists want to know how much money startups need to raise, what is the purpose of use, and what is the duration of that money.
1. CASH IN
Here will be the number of capital startups want to raise; and VCs will often want to see the legitimacy of a given number. Some frequently asked questions might be: does the amount you call align with what the startup wants to achieve? Given the current needs of startups? With the company’s human resources and capabilities? The advice here would be to consider raising the right amount of capital over a 12, 18 or 24-month period.
“Don’t ask for more than the current need, but make a strategic plan to run your company.”
And when you get advice like this from investors, it’s a signal that they may not be interested in your company.
2. CASH OUT
This is the case when the startup uses up all the capital raised before the calculation deadline for the next round. The advice here would be not to draw up a plan with the amount of capital needed to keep the company operating for more than two years, even three years.
What investors always expect when pouring money into startups is liquidity through exit strategies to gain profits.
VCs will typically lead a round of capital and refer the startup to other funds on the next call. Some questions startups can prepare for next time are:
What are the milestones and achievements you need to achieve before your next fundraising?
Are those milestones and achievements enough to spark interest in other VCs?
Will, what you get will be enough to make VC spend a higher amount in the next capital call?
Have you made significant progress in recent years?
Planning a fundraising strategy is not a simple matter, the thing to consider here is the support of experts in tailoring the capital raising plan to suit the company’s situation, ensuring that the investors. The data number is accurate and effectively linked to the next fundraising.