3 Tips to Fundraising for Your Business in Uncertain Times – Entrepreneurs | Region & Cash

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Unless you’ve been living in a cave or on a mission to Mars, it’s hard to miss just how much the mood in money and technology circles has changed over the past few months. The conversation went from complete euphoria to panic and doom seemingly overnight. It’s the same mood as March 2020 when the coronavirus caught us all by surprise, investments froze and stock markets collapsed around the world.

Some say it feels even more like 2008 when we were on the verge of the global financial crisis. Remember when trillions evaporated, businesses collapsed, and banks closed their doors (well, only one, but still)? Just like back then, the market awaits an impending slap in the face after a wild frat party mentality spirals out of control.

The signs have been there all along — valuations have gone through the roof and relatively untested companies are hitting eight-figure seed rounds. However, the market is now becoming more sober and investors may be less generous to these companies as they come back for their Series A and B.

I’m not the one telling you how to spend the money you already have. That’s up to you and your investors. But if you need a start, here are some tips for fundraising during these uncertain times.

See also: A rollercoaster ride: The ups and downs of building a startup in uncertain times

Remember, the money is still there

Yes, the Federal Reserve has started raising interest rates, but all that money that’s floating around doesn’t just go away overnight. Many venture capital funds have plenty of cash, but now they’ll be more careful about how they use it. Regardless of how almighty startup founders may think venture capitalists are, they still have to respond to their LPs.

I asked a founder of a leading Silicon Valley VC for his opinion, and he confirmed my suspicion: “Entrepreneurs should remember that good companies are always funded. I expect there will be a flight to quality, but that funding is likely to continue at a slower pace with lower valuations.” He doesn’t think the current situation will result in a freeze as extreme as 2008.

The key question is: How can you position your company as a quality company that investors can easily justify?

See also: How to make the most of fundraising in 2022

Show your relevance

In the dying embers of the economy in the global financial crisis, some of today’s giant companies emerged like Phoenix, like Airbnb and Uber. Despite all the turmoil, they’ve proven they can fundamentally reinvent entire markets, and that kind of innovation is irresistible to investors. The game has an idea that has just the right amount of madness. As Gabriel Garcia Marquez wrote, “Crazy people aren’t crazy if you accept their reasoning.”

Uber and Airbnb might have been strange concepts back then. But the shared economy model was a hot trend and some venture capitalists were willing to take the risk, while others weren’t, as we see in this timeless article, and have likely kicked themselves on several occasions for writing the wall have not read. For you, it’s now about listening to the headlines that tell you where people’s pain and energy is going.

There are a few big trends to spin your story around, but interest in remote work and sustainability is hard to beat. You already know that digital transformation has become THE vertical in the post-Covid world.

In the long term, the amount of money that will go into slowing climate change will be at an all-time high. Even in recessions, demand is guaranteed as governments and businesses alike look to increase their environmental credentials. Remember, investors don’t want to double or triple their returns, they want to multiply them by 100. If you can demonstrate that you are where demand is guaranteed to grow anyway, you will have no problem raising money.

See also: 5 things entrepreneurs need to know when raising capital

Show urgency, not desperation

Put yourself in the shoes of an investor – do you want to pump money into a company that is barely alive? Of course not. You’re in big trouble if you use up your existing funding and still have to prove your product is fit for the market. The first step is to slow down the bleed to buy yourself more time to get your strategy right. Investors can smell desperation in founders who approach them out of fear rather than opportunity.

There is a delicate balance at play. You want to lift enough that you don’t need to lift again in six months, but not so much to raise your eyebrows. Investors have heard all the ridiculous stories of loss-making companies buying Teslas for all of their employees.

The story you need to create is still urgent. They want to show that there is so much demand for your product that their money will help you meet them, gain market share and grow. You must believe that you are able to act quickly when investing. The best way to prove this is to get your house in order so you tell them the truth.

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