Late-stage startups are faces major hurdles to fundraising, but early-stage investment is still a bright spot for startups until they reach the Series B rounds.
Traditional venture capital dollars are harder to come by these days, but institutional investors are still looking for smart investments, and industry watchers are eager for the good news that a new round of funding suggests. While the market is uncertain, founders must be prepared to use their capital injections as an asset that extends beyond the cash it represents.
In any market environment, a fundraising event can act as a vote of confidence or validation from investors, supporting your company’s growth through talent acquisition and brand awareness. No matter the size of the round, securing outside investment is a key milestone in many companies’ journeys, and often requires a significant amount of effort. However, after putting in all that work, many founders make the mistake of letting a funding moment go by without extracting all the value they could hold.
Over the course of my more than 20 years as a marketing leader at startups, venture capital firms, and large tech companies, I’ve helped dozens of companies announce funding news, ranging from pre-rounds to seed $ 1 million up to increases of $50 million.
Here’s my playbook for founders looking to make their “big money” moments go further:
Rethinking assumptions about fundraising news
Publishing financing news allows you to create incremental value beyond your capital investment by highlighting your momentum and driving brand awareness.
Founders may overlook the value of announcing funding news for a number of reasons, but the main one is assuming the round isn’t “big enough” to warrant attention. When you see other companies raising hundreds of millions of dollars, it can be easy to think that no one will be interested in hearing about your startup’s much smaller round.
Fortunately, that is not true. While big numbers can generate flashy headlines, smaller rounds can still generate interest if the ad is executed well and can connect the news to some larger industry, technology, or societal trend.
Another reason founders are hesitant is whether all or part of the new capital is through a debt investment. Although it is increasingly commonEspecially as VC investors take advantage of breaks, there’s still a certain stigma around debt financing, and founders may worry they’ll be penalized for adding debt to their balance sheets.
However, securing a debt investment often requires even more rigor than an equity investment, so highlighting an increase in debt can indicate your business fundamentals and revenue figures are strong enough to support payment. .
Founders may also worry about giving competitors too much information about their business, preferring to thrive while staying under the radar. There are benefits to keeping certain information secret, but it’s important not to focus so much on building behind closed doors that you miss out on gaining more visibility with revenue-generating prospects and partners.
Finally, funding announcements are sometimes just not at the top of a founder’s long to-do list, largely because they aren’t sure how to run an announcement or lack the marketing expertise to execute it effectively. . The next section should help on that front.
Three Steps to Maximize the Marketing Value of Your Fundraiser
The future is unknown, so when you have a funding round locked in and cash in the bank, you have the opportunity to make the biggest impact possible with the news at hand.
To take advantage of this moment and be successful you need to:
Step 1 – Plan Ahead
Preparing for a fundraising announcement takes time and strategic thinking. As soon as you’ve reached the point in your conversations with investors where term sheets are the likely next step, you should get your marketing team together to start working on a plan. This includes contacting your investors early on about their ability to participate in a news announcement.
Some key questions your marketing leader should consider include:
- Who can provide public quotes or investment commentary?
- What are the key messages you would like to communicate about this round, and what messages would you like your investors to amplify?
- When is the investor available to review the announcement materials and participate in possible media interviews?
