Introduction
If you are talking with one or more VCs, or if you are just interested in having a better understanding of the Private Fundraising ecosystem, you are in the right place!
It’s crucial to know the documentation you may need and how Venture Firms proceed in terms of accomplishing an investment. We differentiate four key stages: Uncover, Catch, Decrypt, and Finale. At each stage, it’s vital to have developed the different documentation that will be asked of you.
So, jump in to know more about how we tackle the Private Fundraising process with this Expert Guide.
What happens inside of a Venture Firm at each stage?
If you have some experience with the Private Fundraising process, you’ll know that at each stage the Venture Firm or any Investor you are speaking with will ask you for specific documentation and information related to your idea, project, company, or team.
But why do they ask for all this data? How will it affect your request for investment? And how can you manage to increase your chances of raising the funds you are looking for?
1) Uncover
First, the most important thing at this stage is to be known by all the investors who could help your project to scale up and grow until the next investment round. We at Futuro Perfecto connect startups and investors for their mutual benefit.
But this process doesn’t start when you may have fund needs, the Uncover phase must start as soon as possible. Your team has to define a roadmap of when and how many funds will be needed, thanks to your forecasts and your analysis. Let’s define this roadmap as the Private Fundraising Plan.
Once we help you establish your Private Fundraising Plan, It is necessary to be thorough in the process of searching for and contacting investors. (Business Angels, Family Offices, Venture Capitals… And many others). The aim of all this is to say ‘Hi!’ to the ecosystem and let relevant people know about your project and your vision. Venture Capitals and investors will appreciate this first contact, and in most cases, you will get feedback from them. It’s important we note it all down, as it will help in the future. This first phase is relevant because of the work that must put in to select and filter the investors who best fit your company and your needs:
Ticket Size.
Sector
Technology (Hardware, Software, both…)
Region
Timing
Your needs from the investor (expertise, contacts with the industry, suppliers…)
Then, when your database is full of potential investors, try to contact them again from time to time, don’t lose the momentum. An email will be enough.
At this stage, we will need at least a Teaser or One Pager for the first message sent to the investors, and your Investors Deck for presenting all your relevant information in the call. Surely, you don’t know how much money you will need once the investment round is active, but we can share some clues with them.
Note: Don’t be afraid to share information from your company, your market, your clients, and how you reach them. Try to not use NDAs, if you have to protect something significant you should patent it.
2) Catch
Congratulations, your company has grown and you need to raise some funds for commercialization, development of new technology, or any other reason.
We at Futuro Perfecto start the Catch phase by opening your investors’ database and re-contacting them with an email relaying the news of your project and letting them know you have an active round of XXX thousand/million euros. It is very important that we attach the Investor’s Deck that will be presented during this meeting.
The goal is to have another call with them. As simple as that. So, we will try to surprise them with a few impressive KPIs (Key Performance Indicators). They will know about your vision, your products or services, the advances you are making in the company, and most importantly, the funds you want to raise.
At this stage, Venture Firms discuss internally whether to move forward with your company or reject it, so try to relax and let them make the decision. This is why it’s ideal to contact multiple investors, so that there is a higher chance of getting quality replies.
Focus strictly on the plan defined and you will achieve it.
3) Decrypt
The Decrypt phase is the longer one. Venture Firms and Investors have to make sure your company meets all the requirements they consider. This is why we will ask you for your Business Plan, your Financials, and Forecasts.
Your Market has to be as large as possible, so all the competitors and big players can coexist. Here we define your Total Available Market (TAM), Serviceable Available Market (SAM), and Serviceable Obtainable Market (SOM), trying to get as close to €1B for the total market, to make the Private Fundraising Process easier
At this moment, a lot of information will be required. The potential investor will want to know more about the team members and to see how your products or services work physically in your offices.
This phase will take at least two months to complete. In the end, you will receive the LoI (Letter of Intent).
4) Finale
While the Finale stage may be seen as the best one, it's never easy selling part of your venture. You should be aware of this and try not to get hesitant at this stage
You now have investors interested in your project! That’s really good news, but it’s time for us to negotiate. Once you fully agree with them and have signed the contract, we have officially completed your first Private Fundraising.
This is a huge milestone for your company! However, it is the first of many others, so try to constantly stay in contact with new investors who could be interested in you.
What are Some Major Factors in the Success of a Private Fundraising?
Of course, your project has to solve a problem, and also your products and services have to have a market. But at the same time being in the right place, at the right time is not easy, so the more contacts you make, the more possibilities you will have to succeed.
You don't have to have everything figured out, that’s what the Fundraising team at Futuro Perfecto is here for, to support you every step of the way!
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