It’s been a long funding winter, even this year (till August ) we had 2 unicorns. Previous unicorns lost their valuation and existing startups are trying to survive. So, here we are again with tips on ‘how to create a fundraising roadmap‘ hope this helps you all. Without wasting any time further let us dig in straight.
A funding roadmap is a blueprint for your company, a kind of internal document with clear metrics and numbers.
Know your Numbers
“How much capital do you need, and how do you intend to allocate it?” It’s crucial to provide a crystal-clear response. You must have a well-defined plan, outlining the specific targets you aim to achieve and the costs associated with it.
Investors hold a deep appreciation for founders who have a deep understanding of their vertical. They expect you to be able to dissect any financial figure into its constituent parts, understanding how funds will be allocated to tech, marketing, customer acquisition, or what’s your unit economics.
Say, you’re the CEO and lack a strong financial background. In such cases, it’s common to rely on your Company Secretary (CS) /Chartered Accountant (CA) for financial matters. But, when you are in discussions with potential investors and you tell them, “my CA knows the financials or insights” doesn’t leave a good impression. Remember, you are the driving force behind your company as the founder. Taking ownership and having a firm grasp of your financials is paramount.
A funding roadmap serves as a means to articulate the amount of funding you need and the strategic allocation of these resources over a defined timeline. It’s your financial blueprint, providing clarity to both you and investors about the capital needs and expenditure strategy for your startup’s growth.
Transparency is the key when it comes to managing your startup’s financial forecasts. While no one can predict the future with absolute certainty, it’s normal for startups to miss on their projected numbers. But, what truly matters is maintaining a clear understanding of your cash flow and resources to propel your business forward.
In this dynamic environment, flexibility is your ally. Revising your forecasts is normal and part of the journey. It’s essential for you not only to adapt but also to have a grasp of every facet of your company’s progress. This level of transparency fosters trust among stakeholders.
Keeping your investors in the loop is important. Honesty should be your guiding principle; don’t limit updates to positive news alone. Be forthcoming even when things aren’t going as smoothly as expected. We recommend providing regular updates, ideally on a monthly or bi-monthly basis. These updates should include a breakdown of ‘how funds have been used’, a comparison of ‘actual costs to projections’, and whether you’ve achieved your ‘predetermined milestones’. This consistent communication is the bedrock upon which trust is built.
Be in a Fundraising mode
Remember to keep the upcoming funding round in your thoughts. In each funding round, investors assess your progress. As said, challenges are part of the journey and it’s common, like marketing costs exceeding your estimates, expansion to other cities/channels didn’t work out well, or sales numbers. These hurdles are quite common, and progress often unfolds at a slower pace than anticipated. It’s important you know metrics, even if you haven’t yet reached your milestones and require additional funding to realize your objectives. The key to attracting follow-up investments lies in your ability to explain why you haven’t met those milestones yet.
In conclusion, a well-crafted funding roadmap is more than just a document; it’s a strategic blueprint that empowers you to attract the right investors, secure the much needed capital, and navigate the complex landscape of entrepreneurship. By approaching this journey with professionalism, adaptability, and strategic insight, you position your startup for long-term success. Remember, in the world of startups, a well-executed funding roadmap is often the difference between soaring success and stagnation.