How to raise investment

tomblomfield.com
7 min read
fairly easy
I've started angel-investing this year, and a large proportion of the companies I've put money into have asked for help raising an investment round. So I wrote up my standard advice as a guide...
here.

This guide is most relevant for founders who are raising a Seed or Series A round, with some amount of product development and early customer traction.

I believe the following advice is mostly correct as of September 2021. The market is changing so quickly that it may not stay correct for long. I plan to update it periodically.

General Approach

If you build a strong business, fundraising will normally be easy. If you focus on fundraising, you may forget to ever build a strong business.

It's very easy to get sucked into the competition of raising at the highest pre-money of all your peers. This may feel like winning, but it is not. Seed-stage valuations don't correlate well with success. Success to me means building a sustainable, profitable company that people love. Investment is just a tool to help you do this.

Airbnb raised its first round out of YC at a $1.8m valuation. They've done pretty well. An extra 5% dilution isn't going to matter if you build a very successful company.

Conventional wisdom says you should aim to raise enough money to fund the business for the next 18 months. I have always spent approximately double what I've forecast, so I'd advise doubling whatever you estimate.

Fundraising is extremely distracting. If you have multiple founders, nominate one to run the fundraising process. He or she should be the primary point of contact for investors. VCs will want to meet all the founders once or twice, but all founders don't need to be in every meeting. As an angel investor now, it's normally a red flag if there are 2 or more founders on the initial phone call.

If you have a CEO, this is the obvious person to run the fundraising. If you don't have a CEO, you're in for a potentially awkward discussion about who runs fundraising. This is one of many reasons I recommend deciding on a CEO earlier rather than later. We did not do this at GoCardless and it was painful.

Fundraising will become all-consuming, so you need to ensure your day…
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