Your answer lies in an incident that took place on February 18, 2020. This incident will give you an idea as how co-founders can help in raising funds.
Atomico, the venture capital firm set up by Skype ‘s co-founder Niklas Zennstrom, has raised an additional €757 million ($820 million) to back “mission-driven” European tech startups, targetting Series A and beyond. The firm raised the funds from several institutional investors, including pension funds, sovereign wealth funds, banks, family offices, insurance companies, and government-backed entities from all over the world. It also drew support from several founders and early team members from some of Europe’s most well-known tech companies including Adyen, Transferwise, Klarna, Spotify, and Zoopla. The new raise brings Atomico’s total assets under management to a staggering €2.4 billion ($2.7 billion).
Thus, we learn the following methods to raise funds from this above incident:
Prepare Yourself: Fundraising is a mind game as much as anything else. Setting expectations appropriately can mean the difference between success and failure. Expect rejection as part of the territory but try to see it as a learning opportunity rather than a failing. At first, pitching feels like really putting yourself out there, but the right investors will see your company’s potential. Envision yourself receiving those checks.
Focus on Traction: Substantial gains in marketplace popularity impress investors more than any other metric. Focus on building your user base from day one. These first users became evangelists, providing feedback that helped me test and shape the product. The early traction we gained demonstrated to potential investors a genuine marketplace needs and interest in our platform. After all, if people will use the bare-bones version of your product, investors can envision what you can do with development and marketing budgets.
Seek Good Advisors: The best mentors are those who believe in you and your business. They will be your sounding board in lieu of a co-founder. Reach out to them through any means available: Twitter, Facebook, LinkedIn, or personal connections, when possible. Great mentors provide excellent business advice, such as insights into approaching investors and negotiating equity distribution. They will help you validate your idea, figure out how to differentiate your product, and expand your network. Investors are generally too busy for cold calls, but they may entertain a referral because of your advisor’s credibility.
Perfect Your Funding Platform Profile: Funding platforms, such as AngelList and Circle Up, give investors access to support ventures based on the quality of the idea. People invest as much in the person as the idea, so whichever platform you use, ensure that your profile is excellent. Do not be afraid to include your other business ventures, even if they have folded. Investors will appreciate your experience founders and co-founders who fail with their first venture are more likely to succeed with their second.
Build Your [Lean] Team: Having a great team alleviates a major investor fear—that you have some deep personality flaw. But more than that, when you begin raising funds, your attention will be diverted from the day-to-day of the business for months. Planning for it with strategic hiring will ensure that the company (and traction) do not suffer.
Start Pitching: You cannot divide and conquer as a solo co-founder. Build relationships with as many people as possible both for the practice and to save you time with investors who string you along. Prepare components of the pitch before asking for the meeting and support all claims with metrics that demonstrate your company’s potential for producing great returns. Practice your pitch with your mentors and team, and then get out there for real.
Even if the investor does not offer you money, they may invest later. Stay positive and maintain good relationships along the way, periodically updating those you have pitched. I was rejected by more than 60 angels and VCs before landing my first check — from someone who had already said no 25 times.
Spend for the Future: Before you accept a deal, ensure you are comfortable with it. Get excellent legal advice before signing. It may seem like a huge expense, but it could prove invaluable in the long run. Managing resources wisely will help you raise a good round next time. Common mistakes include raising too much money with a valuation and goals that are impossible to achieve or raising too little money to achieve significant results and having to ask again too soon. It is best to be raising money while you still have money so that you are not inclined to accept a bad deal. Lastly, leading a company intermittently on the financial brink is taxing, so while funding may feel like a relief, prepare for the oversight and obligation that accompanies accepting a huge debt. You have responsibilities to your employees, investors, and users. Slowing your burn rate can mean the difference between shutting the doors early or trying one more test.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath