They are a late-stage start It’s facing significant fundraising headwinds, but early-stage investing is still a bright spot for startups until they hit 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 hungry for good news that suggests a new round of financing. While the market is uncertain, founders must be prepared to use their capital network as an asset that extends beyond the money it represents.
In any market environment, a fundraising event can serve as a vote of confidence or validation from investors, supporting your company’s growth through talent acquisition and brand awareness. Regardless of the size of the round, securing foreign investment is a key milestone in many companies’ journeys and often requires considerable effort. However, after doing all that work, many founders make the mistake of letting the funding period pass without extracting all the value they could have.
In my 20+ years as a marketing leader at startups, venture capital firms, and large technology companies, I’ve helped dozens of companies announce funding news from $1 million pre-seed rounds to $50 million.
Here’s my playbook for founders looking to make the most of their “big money” time:
Rethink assumptions about fundraising news
Disclosure of funding news allows you to create additional value beyond capital investment by demonstrating your initiative and product awareness.
Founders can overlook the importance of announcing funding news for a number of reasons, but the biggest one is assuming the round isn’t “big enough” to warrant attention. When you see other companies raising hundreds of millions of dollars, it can be easy to think that no one would be interested in hearing about your startup’s very small round.
Fortunately, that is not true. While big numbers can attract flashy headlines, small rounds can still generate interest if the announcement is well-executed and you can tie the news to larger industry/technology/societal trends.
Another reason founders hesitate is if all or part of the new capital is a debt investment. Although it’s becoming more common, especially as VC investors take out breaks, there’s still some stigma around debt funding, and founders may worry that they’ll be penalized for adding debt to their balance sheet.
However, securing a debt investment often requires more rigor than an equity investment, so highlighting a debt raise can indicate that your business’s fundamentals and revenue numbers are strong enough to support a payout.
Founders worry about giving away too much information about their business to their competitors and prefer to thrive while flying under the radar. Keeping certain information under wraps has its benefits, but it’s important not to focus on building behind the scenes and miss the opportunity to gain more visibility with revenue-generating prospects and partners.
Finally, fundraising ads are sometimes not at the top of a founder’s long to-do list, often because they are either unsure of how to run an ad or lack the marketing knowledge to execute effectively. This next section should help on that front.
Three steps to maximize the marketing value of your fundraising
The future is uncertain, so when you’re closed on funding and have money in the bank, you have the opportunity to make the biggest impact you can with the news at your fingertips.
To take advantage of this time and be successful, you must do the following:
Step 1: Plan ahead
Preparing for a fundraising ad takes time and strategic thinking. As you get to the point where term sheets can be the next step in your investor pitches, you need to get your marketing team together to work on a plan. This includes prioritizing with your investors their ability to participate in news announcements.
Some key questions for your marketing leadership to consider include:
- Who can provide public quotes or opinions on investments?
- What are the key messages you want to convey about this round and what message do you want your investors to take away?
- When will the investor be available to review promotional materials and participate in media interviews?
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