Fundraising for the company is a part of the journey and not the destination
Fundraising 101 for startups
I clearly remember that it hadn’t been more than a year since I had started my career in investment banking with a humble and noble objective to help early and mid-stage companies raise financial capital, when I heard an eminent founder speaking to a room full of startup founders, enthusiasts and financial capital providers.
Though I am not going to name the founder but as a reader you must know that he is one of the most prolific founders of our time, who currently runs a multi-billion dollar enterprise after having sold his earlier venture in probably one of the largest tech deals in the country.
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While his entire talk was enthralling, there is one statement from that talk that has stayed with me – “Fundraising for the company is a part of the journey and not the destination”.
On this note and with this thought, let us drive straight into understanding some basic nuances/aspects about fundraising for a startup and discuss some critical success factors that a company should bear in mind at the time raising capital from investors.
The idea behind sharing these thoughts is to give you a preliminary understanding of fundraising from investors whether institutional or individuals –
Investors bet on the moat & story – Before you set out on the journey to raise capital, it is extremely important to understand and answer the question – “Why should the investor invest in my business?”. Well, let us get this straight that the investor is only going to invest if the business has a strong moat that will allow the financial investor to build a robust risk-return profile.
So, what exactly is the business moat? As Investopedia suggests, the term economic moat or business moat, popularized by Warren Buffet, refers to a business’ ability to maintain competitive advantag