So, you have a brilliant idea and you think you have got the whole idea figure out. You dream that one day your company will have a unicorn valuation but to reach this target you need to raise funds, which to many founders is a big obstacle. In this article, I intend to cover the basic knowledge most founders will need in their journey and this should not, in any way, be taken as a complete guide to fundraising. Create a Fundraising Strategy Whatever the stage of your startup, whatever your goals, whatever your valuation, one thing remains in common; You need to create a fundraising strategy. A fundraising strategy outlines how you plan on going about raising funds. A fundraising strategy is ideally a written document. Your fundraising strategic plan needs reliable groundwork to properly position you in front of the right investors. A good fundraising strategy should at least respond to these:
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Why – reason for raising capital
Who – from whom the capital is being raise?
How much - How much capital will you need to raise?
When - When are you planning to raise capital?
How - How you intend to go about raising the funds?

Here’s how you can go about answering these five questions in hand.
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Understanding Your Value ‍

The first and the most important step in this process is to do the valuation of your startup. Valuations are derived from many different factors including management, proven track record, market size, risk etc. These factors, in turn, impact the type of investors likely to get involved and the reasons why your company may be seeking new capital. Essentially, the valuation will help you start answering the five key questions listed above.  

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Set goals and a time limit

‍‍Take time to understand what you need to raise money for? What are you going to accomplish with it? What are the milestones it will help you hit? And never forget; investors don’t fund capital shortages, they fund opportunities. Setting clear, measurable and time-bound goals are the prerequisites to creating an effective fundraising strategy. It’s also important to be strategic about when you raise funds. Timing matters! You want to raise from a position of strength, not weakness. As a rough guide, raise money when you have figured out what the market opportunity is and who the customer is, and when you have delivered a product that matches the needs of customers and is being adopted at an interestingly rapid rate in the market.

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Research Your Investors

‍Investors often do their due diligence on you and you should be doing the same. You are choosing investors as much as they’re choosing you. Investor research should be based on two principles: targeting the right investors and doing unbiased research. For example a small, early-stage startup that aims to grow slowly will want to target a very different set of investors compared to a tech firm that wants to scale up fast in hopes of being acquired by a giant. Choose investors that will not only provide the capital but will also truly believe in your idea and stick with you through thick and thin. Find out more about who your investors are, their strengths and weaknesses, and ways they can add value to your company in addition to the investments they bring with them. Make sure your investors are the right fit in terms of your stage sector, geography, and ticket size.

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Deciding How Much You Want to Raise
The biggest mistake a founder can do is come up with arbitrary figures. Base your decision on facts and realistic assumptions, define clear milestones, Forecast your funding needs beforehand. Be optimistic about what your company can achieve, but not illogical. It’s typically recommended to raise as much money as needed to get to your next “fundable” milestone but sometimes it can backfire. This may lead to high expectations from your company and if the numbers don’t do justice, the next round may be a down round and it can cause a lot of trouble further  ‍

Make a Plan

‍‍Fundraising should be approached and managed as a process. Once you have your fundraising strategy, it is important to use it as a guideline for your fundraising activities (and adjust for new information). Your fundraising strategy should clearly outline how you are planning to reach out to every investor on your list – through which channel, when, and how. It will make your life easier if you can automate some of the processes and prepare as much as possible. Have a sturdy CRM containing all your potential investors and the information about them. Create a system which will contain all the information you need on each investor and where you are at with them in the process (emails, meeting notes, reminders, etc.)  

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Always tailor the pitch to the Investor

‍Every investor is different. Some investors are hyper-focused on product or service specifics, metrics involved, some aren’t. Some want to hear more about your personal story and why it matters to you, some don’t. Tailoring your pitch to your investors is one of the most important things, especially when it comes to creating a fundraising strategy that works. Cookie-cutter pitches just won’t get the job done. Before a meeting with an investor, learn as much as possible about them and prepare at least 3-5 key points to convey in that meeting. Some key points will, naturally, be the same for each investor, but the rest should be more customized, depending on the investor. On that note, make sure your investor pitch is polished. First, start with meeting angel investors and VCs you are less in love with and then iterate and iron out kinks in your pitch and deck after every meeting. Then, go in for your best VC meeting. When you feel like you have heard basically every question/concern/objection and have rock-solid answers for addressing each one of them, go for it with your most wanted investor(s) that you dream of working with.