5 Important Resources You Can Use to Raise Capital for Your Startup

Logan Burchett
28 Oct 2022

As a founder, you likely have a lot on your mind. Raising capital for your startup is probably near the top of your mental “to-do” list, but chances are you haven’t really gotten around to starting on it just yet.

It’s important to raise capital to support growth and scalability in the early stages. While it might be a stressful task, raising capital isn’t really something you can leave on the back burner. It takes time to raise capital for a business — sometimes months. You might run out of money and have cash flow problems if you wait. In fact, a U.S. Bank study found that cash flow trouble is the main reason that around 4 out of 5 small businesses fail.

If you’re gearing up to raise funds, there is some good news and some bad news. In 2021, global venture funding for startups reached over $600 billion — nearly double the amount invested the previous year. However, the current volatile market has left many investors feeling averse to risk, so it might be harder to raise this year than it was last year.

Thankfully, there are ways to increase your chances of successfully locking in the funding you need. Below, we’ll take a look at five of the most important resources you need to know about.

Gust will keep you updated with the latest fundraising experts on resources and how to raise capital.

#1: Pitch Deck

When you’re lining up meetings with potential investors, it’s easy to get excited about the opportunities you’re finding. But it’s important to reel that excitement in and focus on creating an effective presentation. You may only get about 10 minutes to showcase your startup in a boardroom setting. So, it’s a good idea to limit your pitch deck to about 10 critical slides.

Your pitch deck will likely be your company’s first impression with potential investors. Make sure your slides look clean and professional. You’ll want to capture the investors’ attention within the first few slides. Specifically, potential investors should agree that a problem or an unmet need exists. After that, you’ll need to convince them that your business offers a solution for this pain point and value for consumers.

Once potential investors’ interests are piqued, you can finish up your slides with a brief overview of your startup’s current achievements and a competitive analysis. You’ll also want to include future plans regarding go-to-market strategies and financial projections. But for these last few slides, don’t overwhelm potential investors with too much data.

Strategically leave room for questions to keep investors engaged. If you successfully keep the conversation going, they will likely ask about your financial model next.

#2: Financial Model

When you reach the second meeting, it’s likely the right time to share your financial model with potential investors. While you may have impressed them with your pitch deck, you still need to keep proving yourself at this stage — and a financial model is the perfect tool for the job.

If you can competently answer questions about your financial model, you’ll appear confident, knowledgeable, and trustworthy about where your business stands. This also shows that you have a clear and realistic plan of how your business will grow. So, a keen understanding of your model may help you raise capital with potential investors. On the other hand, you can hurt your chances to raise capital for a business — if you’re not familiar with the assumptions in your model and the logic behind them.

In today’s unstable environment, potential investors will heavily value your financial model and your mastery of it. You may need to show investors that you have accounted for different situations — including worst-case scenarios. They like to manage risks and want some assurances that your startup will meet its goals.

While free spreadsheet templates are available, there are also financial modeling software options. Forecastr is a Gust partner that helps founders build great financial models. Their technology and team can help set you up for success in fundraising.

#3: Data Room

At this stage, investors will likely ask to see more company documents as part of the due diligence process.

Make sure that you’re prepared for this. It can take months to raise capital, and the due diligence process can add additional delays if you don’t have an organized method for sharing documents.

To prevent these delays, consider putting together a data room. It’s a critical asset with all your documents in a centralized location, which potential investors can access with a shareable link. Data rooms can be hosted in Dropbox or Google Drive. Savvi also offers a free data room to members of their community. To give potential investors a user-friendly experience, ensure your data room is well-organized with clearly labeled folders.

#4: Investor Pipeline

It’s never too early to start connecting with investors and building an investor pipeline. But the best place to find investors may depend on your startup’s stage, industry, and geographic location.

Thankfully, there are tools and websites available that may help you connect with potential investors. Examples include Gust, AngelList, Crunchbase, and Pitchbook. There are also networking events — try to attend the ones within your industry. Finally, don’t forget about well-established connections from your personal network.

Once you find potential investors, you might be tempted to immediately jump into pitching your company. But hold off on pitching until later — when you have an appointment to pitch. For now, focus on making human connections.

Though having a sound business plan is essential, potential investors are also interested in you as an individual. So, work on being a likable, confident, and relatable person first. Successfully doing so may help increase your chances of raising capital in the near future.

While you’re networking, keep a spreadsheet of potential investors and their relevant information. When you find potential investors who are good matches for your startup, stay in touch with them — unless they ask to be removed from your contact list.

Keep potential investors interested with monthly update emails on your startup’s achievements, key performance indicators (KPIs), and changes in financial projections. Use the spreadsheet to track your progress with these investors and their interests. Once you identify highly interested investors, it’s time to start scheduling your pitch.

#5: Confidence

It’s important to build rapport with potential investors and focus on making human connections first. Help them trust in your business and have confidence in you as an individual.

Monthly update emails are a great way to follow up and keep investors informed about your startup. This also helps further build their trust in you and it keeps them engaged. Email lists actually have better engagement and clickthrough results than many other marketing methods.

After you crush your pitch meeting, you can continue building confidence by presenting a sound financial model and giving investors a chance to examine your assumptions and expectations.. This is why your model should always be “fundraise ready.”

Monthly financial projections up to five years into the future facilitate transparent communication with investors and help you confidently answer their questions.

Reach out today to learn more about how Forecastr helps startups build great financial models that help founders succeed in fundraising.

About Forecastr

Forecastr is a financial modeling tool that lets you build a great financial model as efficiently as possible. Trust begins and grows with total transparency and a robust model. And building trust with your investors is more important today than ever before. We pair every new partner with two expert analysts, who work alongside you and your team to build your model from your actual financials. Click here for more information.

Gust will keep you updated with the latest fundraising experts on resources and how to raise capital.

This article is intended for informational purposes only, and doesn't constitute tax, accounting, or legal advice. Everyone's situation is different! For advice in light of your unique circumstances, consult a tax advisor, accountant, or lawyer.