Fundraising Options for Tech Startups Beyond Venture Capital

Three Core Risks Facing Any Startup

When approaching investors, building your presentations and finalizing your pitch, founders must address three core risks every startup faces:

1. Can you build the product?
2. Are there people who want to buy this product?
3. And are you the right team with the right skills to scale this business?

Investors are looking for how your company will counter these risks as you grow and scale. This is especially important during early-stage raises as your investors will take on more of these core risks. But how do early-stage companies, with little to no revenue, help ease these investor concerns? For product/market fit, Alex shares that traction can be enough to demonstrate a promising trajectory.

“You want to make sure you can demonstrate you have a lot of traction. Traction shows that you have product market fit. So even though you don’t have a million in revenue, you want to say I’ve spoken to 5000 customers and they’ve all signed up to our wait list or I’ve got 10,000 people who are on our newsletter.” 

On the scale and growth side, you need to demonstrate, not only the quality of yourself and your co-founders, but also the quality of others on your team. Founders cannot do everything on their own. An essential aspect of scale is having a team with diverse skills that will fuel the company and execute growth strategies. One way to do this is through an advisory board.

“You’re not going to have every single skill. It’s more about knowing what skills you don’t have and getting people onto your Advisory Board who cover off those skills. If one of you is a technology wiz and the other is really good at marketing, but you don’t have a finance person, get somebody on your Advisory Board who has real experience in the startup finance space or vice versa. This is what helps round out your skill set and makes it clear that you are the right team to really grow and scale the business.”

As a final word of advice, Alex reminds startups that receiving capital from an external investor is just the start. Once you’ve received the money, you are in a long-term relationship with that investor, and nurturing that relationship is key to further capital-raising success.

“How you treat your investors after your raise is extremely important with helping make sure that you continue to have a really positive environment and culture in your business, but also help you in the long term with potential future rounds and keeping your investors feeling very positive about their investment.”