The COVID-19 pandemic has had an immense impact on the global economy. Businesses across the globe are facing the challenge of weak demand, changing consumption patterns and revenue losses. With some countries heading back into second lockdowns, and regions of the UK having to effectively shut down once more, financial markets are going to take a long time to recover. With an estimated loss of $9 trillion in global GDP over the next two years, businesses across the world face an incredibly difficult and challenging period. Start-ups, especially, are facing numerous challenges (for tips on overcoming these challenges, check out our blog post here) – including raising funds. This is only hindered by investors becoming wary of the economic implications of COVID-19, causing a decline in funding activity. So it begs the question, just how do you raise funds in a time of crisis?
Do your research
Finding the right investment for your start-up is essential. Now more than ever, investors and VCs will be more cautious about who and what they invest in. Doing your research will enable you to find investors that are best suited to support you. Our Insight Reports from Beahurst allow our members to take their investor research to the next level. Thanks to our partnership with Beauhurst, we can provide members with competitor insights that enable you to find the best investors for your companies. The bespoke Beahurst Insight Reports allow our members to understand who invested in their competitors, and where to find the most appropriate investment for their company.
“Reasoned rejections are the best way for a company to grow and develop.”
Don’t be afraid of “No”
Raising funds at any time requires founders and CEOs to be headstrong and willing to bounce back from rejections. Being told “no” now may be the catalyst to get investment in a few months, once you’ve ironed out the problems that initially put investors off. Reasoned rejections are the best way for a company to grow and develop. During the crisis we find ourselves in, you’ll probably experience more “no’s” than ever. But, if you can get through this period with a positive outlook on the future of your company. Learn from your rejections and innovate your business, you can get through anything.
Build long-lasting relationships
Another incredibly important factor for how to raise funds is regular contact with your investor community. Let them know what you’re up to! Share your recent developments, product launches, successes, failures. Let them know you’re working hard. Let your network of VCs and angels follow your process in real-time. Treat it like a long and subtle pitch. Creating strong relationships now may prove fruitful in the future when we return to some kind of normality.
“Be transparent and honest; it’s the key to any long and healthy investor relationship…”
Be transparent and open
Be open to negotiations when it comes to valuations. Economic uncertainty is rife, so starting with an extremely high. And, ambitious valuation may be your worst enemy, and put many investors off. By setting realistic and achievable valuations, you will gain the trust of investors. Be transparent and honest; it’s the key to any long and healthy investor relationship, especially during a crisis.
Maybe it’s time to reassess
If raising funds has become a near-impossible task, it may be worth reassessing your business and your pitch. Remember, this isn’t a sign of failure. It emphasizes your ability to learn and grow as an entrepreneur and as a business. Primarily, think about the viability of your business. And, make any necessary changes to ensure there is an actual demand for the products or services you provide. Investors tend to back up businesses with a strong USP, so ensure your pitch deck reflects this. Whether that’s in terms of your unique and innovative product or the problem you are trying to solve. You should be standing out from the crowd so investors can see you.
Here at Entrepreneurs Collective, we can facilitate introductions for your fundraising startup with our network of well-engaged investors & VCs. We’ll ensure introductions are made to those interested in your sector, who we believe can make a genuine difference to your company. You can network with investors at our events too, just check out our blog on the importance of networking. Better yet, why not apply to pitch at our monthly pitch competitions and put your business in front of a panel of ‘dragons’?
Hope you enjoyed and leaner something valuable on how to raise funds, thanks for stopping by!