Secure Venture Capital Funding to Achieve Strategic Growth

Tech CEOs need cash for each stage of company development. A delay in raising capital or insufficient cash will impact potential for growth and scale. Lost growth opportunities accumulate rapidly and can greatly impact the organization.

When developing a fundraising plan, tech CEOs should create (or update) their long-term strategic plan and then break down their fundraising plan into approximately 18- to 24-month intervals. The financial plan should determine key performance milestones and funding required to achieve the milestones.

Establish and execute against company performance milestones aligned with the strategic plan to trigger fundraising efforts. Milestones can include, for example:

• Achieve problem solution fit, execute product launch and acquire first customer(s) with seed-round funding.
• Achieve product market fit, reach $5 million in annual recurring revenue (ARR) and $10 million annual revenue with Series A funding (depending on segment).
• Scale and optimize growth and expand hiring with Series B funding.
• Reach sustained annual revenue growth of more than 25%, market expansion and positive cash flow with late-stage (Series C and D, and beyond) funding.

Tech CEOs should include the performance milestones with their strategic plan and analyze the resulting financial projections to develop a detailed fundraising plan. The fundraising plan should include the trigger points to initiate fundraising efforts, along with financing deadlines. These efforts will help ensure the company has sufficient funds to fully execute its strategy.

Tech CEOs should analyze various sources of funds for each investment round, including seed, Series A, Series B and Series C and beyond. Then target investors based on the investment stage and milestones achieved by considering investor focus and value-adds.

Think creatively when developing the fundraising plan and be open to changing the plan to take advantage of new opportunities as they arise. Take, for example, an unexpected opportunity that presents itself — due to the impact of an economic downturn — to acquire another company of high strategic value. In this case, the tech CEO needs to be flexible enough to quickly execute an investment round and raise the funds needed to make the acquisition. This means continuously developing the next funding round so there’s always an open window to capital.

Tech CEOs know a compelling pitch deck can be the difference between gaining a solid investment and no cash. As part of corporate development and growth strategy, an effective pitch deck will tell a concise, simple storyline and have a focused approach in outline, structure, style and tone.

There are common best practices to use and pitfalls to avoid when building these slides. They fall into three categories: structure, style and tone.

DON’T: Try to answer all possible questions.
DO: Create a concise narrative to open investors’ minds to your vision and get them excited to learn more.

DON’T: Use too many slides.
DO: Aim for 12 slides max. Compelling decks are short.

DON’T: Use fancy, bandwidth-hungry graphics. They bloat deck size and most investors’ firewalls block attachments over one megabit.
DO: Save the artwork for in-person demos.

DON’T: Try to target as many customers as you can in an effort to not miss any opportunities. When a target market becomes too broad, it doesn’t identify with your ideal group of buyers.
DO: Define the ideal target customer. Conduct a thorough market segmentation to find a subsegment to penetrate first. Then, indicate which adjacent subsegments will be targeted to grow. Doing so helps demonstrate a focused market penetration strategy to investors.

DON’T: Overcrowd slides.
DO: Be visual. Use bullet points and easy-to-read type (a good rule of thumb is nothing smaller than 30-point font).

DON’T: Use vague messaging. Without key concepts explicitly stated on the slides, investors will not understand the value proposition when reviewing the pitch on their own.
DO: Create the pitch deck as a stand-alone document with key messaging explicitly stated on each slide.

DON’T: Fail to distinguish your offering from others out there. Investors see hundreds of companies addressing similar problems, failing to communicate their differentiation in a crowded market.
DO: Develop differentiated messaging to highlight what makes your company uniquely suited to solve the customer’s problem.

DON’T: Excessively focus on product features. Many pitch decks lose focus by centering on technical product features. These pitches fail to convey the business need of the overall solution to potential investors.
DO: Connect product capabilities to business outcomes. Maintain a good balance of technology and business-oriented information by linking the value proposition with business value.

DON’T: Belittle competitors — it shows arrogance or ignorance (or both). This is a huge red flag for investors.
DO: Be humble, acknowledge the competition and show respect. Demonstrate how you can outsell or out-innovate them with data … not opinion.

DON’T: Ignore diversity requirements.
DO: Keep in mind that lack of diversity in executive positions has become a red flag for investors. Be ready to answer questions and/or explain your diversity strategy if your executive team is homogeneous.

DON’T: Artificially Inflate your numbers; it’s a slippery slope.
DO: Speak the truth about your financials, market traction, etc. If the numbers are underwhelming — own it, explain why they are that way and how you plan to fix them.

Tech CEOs looking to raise money in today’s world must be prepared to use creative and aggressive tactics to expand their funding alternatives. The current macroeconomic environment has changed the game for venture capital investment funds. In turn, tech CEOs need to think creatively to gain VC investments.

For most tech CEOs, utilizing a variety of approaches will be the most beneficial. Gartner has created a list of six potential ways to raise funds.

Attend industry and investor conferences frequented by prospective investors, or where investors are speakers and panelists. Tech CEOs can maximize opportunities to meet investors by being speakers and panelists themselves, and including calls to action with their speeches, or by renting an exhibition booth. Use your “elevator pitch” as a conversation starter with investors.

Desired outcome: Convince investors to meet for an investor pitch presentation and invest.

Persistence is the secret to getting into a high-quality accelerator. Most companies apply several times before being selected. Benefits of an accelerator include mentoring by successful entrepreneurs, networking with other founders or members both current and past, discussions with well-known serial founders, and culminating with opportunities to present to select groups of angel and institutional investors. Many accelerators or incubators also make direct investments in selected companies.

Desired outcome: Convince accelerators to provide meetings with investors, or make investments themselves.

Before presenting, tech CEOs should research angel groups, including contacting the leaders, key participants and current portfolio companies, to learn about the investment decision process, presentation and meeting schedule, typical amounts and deal terms. Tech CEOs should target angels and angel groups with the appropriate affiliations, such as technologies, geographies, cities and universities.

Desired outcome: Convince an angel to “sponsor” you and help navigate your path to investment.

Tech CEOs should enter investor pitch competitions and “pitch battles” or “shark-tank” style sessions common at tech industry conferences. These provide excellent opportunities to present to prospective investors and practice your investor pitch. Tech CEOs should research pitch competition rules, awards, deadlines and past winners to ensure they are participating in the most appropriate contests.

Desired outcome: Win the pitch competitions and convince investors to invest.

Maximize the use of social media applications (such as LinkedIn, X and Instagram) to get noticed by adding posts about your company’s milestones, events and press releases. Add comments on other influencers’ relevant industry or technology-related posts. Search on social media for connections within your network of contacts (including second-, third- and fourth-level) for potential “warm” introductions.

Desired outcome: Increased brand awareness and “buzz” so investors respond to you with deeper interest.