Late startups are It faces significant fundraising headwinds, but so does early-stage investing Still a bright spot for startups to make it to the Series B rounds.
Traditional venture capital dollars are hard to come by these days, but institutional investors are still looking for smart investments, and industry watchers are thirsty for the good news that a new round of funding is proposing. While the market is uncertain, founders need to be prepared to use their capital payment as an asset beyond the cash it represents.
In any market environment, a fundraising event can act as a vote of confidence or validation for investors, supporting your company’s growth through talent acquisition and brand awareness. No matter the size of the tour, securing an offshore investment is a major milestone in many companies’ journeys, and often requires an enormous amount of effort. However, after putting all that work in, many founders make the mistake of letting a funding moment pass without extracting all the value they can get.
In more than 20 years as a marketing leader at startups, venture capital firms, and big tech companies, I’ve helped scores of companies announce funding news, ranging from $1 million in pre-seed rounds to $50 million.
Here’s my playbook for founders looking to make more “big money” moments:
Rethink assumptions about fundraising news
Funding news publishing allows you to create additional value beyond your capital investment by highlighting your momentum and increasing brand awareness.
Founders may overlook the value of announcing financing news for several reasons, but the biggest reason is the assumption that the round isn’t “big enough” to generate interest. When you see other companies raising hundreds of millions of dollars, it can be easy to think that no one would be interested to know about the smaller round of your startup.
Fortunately, this is not true. While big numbers may attract headlines, smaller rounds can still generate interest if the advertising is executed well and you can tie the news to some of the larger industry/tech/society trends.
Another reason for founders’ hesitation is whether all or part of the new capital will be made through debt investment. in spite of are becoming more commonThere is still a stigma around debt financing, especially as venture capital investors pump out breaks, and founders may worry they will be penalized for adding debt to their balance sheets.
However, securing a debt investment is often more stringent than an equity investment, so highlighting increased debt can actually indicate your business fundamentals and revenue numbers are strong enough to support repayment.
Founders may also worry about giving competitors too much information about their business and would prefer to make progress while flying under the radar. There are benefits to keeping some information under wraps, but it’s important not to focus so much on building behind closed doors that you miss the opportunity to gain greater visibility with potential customers and partners who will generate revenue.
Finally, funding advertising is sometimes not at the top of a founder’s long to-do list, largely because they are either unsure of how to run an advertisement or lack the marketing experience to implement it effectively. This next section should help on that front.
Three steps to maximizing the marketing value of your fundraiser
The future is unknown, so when you have a closed funding round and cash in the bank, you have the opportunity to make the biggest impact possible with the news you have.
To take advantage of this moment and achieve success, you need:
Step 1: Plan ahead
Preparing for your fundraising announcement takes time and strategic thinking. Once you get to the point in your investor conversations where term papers are a possible next step, you should assemble your marketing team to start working on a plan. This includes agreeing with investors early on about their ability to participate in a news announcement.
Some of the key questions a marketing leader must consider include:
- Who can provide general quotes or investment commentary?
- What are the key messages you want to get across about this round and what messages do you want investors to amplify?
- When is the investor available to review advertising materials and participate in potential media interviews?