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Preparing to Raise Capital: Essential Tips Beyond Pitch Deck Financials

So you’ve taken the leap, launched a business, gained traction, set up operation plans, and now trying to find outside funding.

While most business leaders cringe at the thought of the prep work involved in capital raising, it’s not nearly as painful as you might imagine. Here, we’ll focus on exactly what planning is needed for a successful capital campaign.

Plan first, then execute

Like most things in life, planning, and strategy is the key to success. This is no less true when preparing to raise capital.



Start by taking an honest look at important financial documents and clearing up anything an investor might question. For example, audit the current capitalization table and review financial forecasts. If the market outlook has changed, adjust accordingly. Prepare complete financial models and forecasts required for investors, checking for errors and accuracy along the way.

This research will enable level-headed decisions, including whether now is the right time to seek funding, how much money is needed, and where money will go (if secured).

Once you’ve verified that it is indeed a good time to raise funding, only then should time be spent researching funding targets. Securing capital takes significant band-with, so no business should waste valuable time on unreliable targets. During this stage, if pursuing venture capital (VC) and private equity (PE) firms, business leaders should also determine what they are willing to give up in exchange. PE and VC funding is usually accompanied by the acquisition of an ownership stake in a company and decision-making powers.

Create a valuable pitch deck

When it comes to managing the requirements of securing investors, no other element is quite as crucial as a pitch deck. This long-standing staple of capital raising serves as the gateway for potential businesses to share high-level goals and financial projections to convince investors that there is merit in their business model.

A pitch deck has just one goal: to prove that you’re worth the investor’s attention.

Most great pitch decks answer a number of key questions:

  • What is the business vision?
  • What does the market look like?
  • Why raise capital (and why now)?
  • What can we expect from financials?

Moreover, a good pitch deck is clear and simple – from the charts and graphs to the messaging.

Always remember that numbers in your pitch serve a purpose – they prove the story you are telling about your market and your company. In other words – data is evidence. It doesn't tell a story entirely on its own and needs to be interpreted. This is where good financials come to play.

Why you should have financials in your pitch deck

It is a common misconception that financials are only relevant to later-stage rounds of funding. However, it is important to have good financials in your pitch deck, even when you are raising seed or series A money.

Financial data serves multiple functions: they help an investor understand the business, they help the investor understand your risk, and ultimately they help them understand how much money you will be able to raise and what exit strategy is available for the investors’ investment.
For example, a quarterly financial report provides key metrics such as revenue and net profit (or loss) over time, as well as cash flow statements that show how much money is coming in and going out each month or quarter. This data helps future investors understand how well your business is growing over time while also giving them insight into how well it performs financially (and whether it has enough money at any given point).

When creating a pitch deck, consider how to use financials to tell your story effectively.

For example, you can harness financial data to create a competitive advantage by providing more information than others do about key metrics like customer retention rates or revenue growth rate projections over time frames longer than one year, etc.

Prep for financial questions from investors

While financials will take up only a slide or two in a pitch deck, it is crucial to fully understand the type of data investors look for when making decisions. Questions will often come up (and rightly so) during the fundraising process, and it's never good to be caught off guard. As a business leader, you’re most likely familiar with the financials of your company, but how confident are you in their accuracy and do you know what the numbers mean?

It’s best to arm yourself with any information needed to answer questions from potential investors, as well as to have important materials and data on hand for all stages of the pitch (more details on materials below).

To help prepare, here are some of the most common financial questions likely to be asked:

  • What are your major expenses?
  • What is the monthly burn rate (e.g., how much money is in the bank account)
  • How long do you think it will take for your company to reach profitability?
  • What is your revenue forecast, and why?
  • What is your profit forecast and why?
  • How does this compare with competitors in your space, both at home and abroad?

For example, you’ll likely be asked what is the monthly burn rate. When you don't have any numbers at hand, it can be unpleasant and lead to the assumption either that something is wrong with your business model or that there isn't enough cash coming in to pay salaries each month. But having reported on hand of performance over time (or even just some rough estimates), then these become easy questions for everyone involved because they'll be able to see how things are going and whether they're heading toward profitability or not.

Develop compelling fundraising materials

While financial reports and a pitch deck get most of the limelight, there are many documents that can help generate investor interest in a business and compel them to take the next step.

Well-prepared, professional materials are required, such as:

  • Pitch deck including a summary of the business plan, products and services, growth history, and plans for using new capital.
  • Due diligence items such as leases, patents, contracts, and/or any information to justify a company’s worth.
  • Detailed financial modeling, including:
    • At least three years of financial projections
    • The amount you are raising and the plan to deploy the capital
    • Business valuation
  • Summary of key investment factors and risk assessment factors.
  • Marketing and sales items such as materials, projects, and processes.
  • Operational structure, including an organizational chart, employee statistics, and compensation strategies.

The preparation and planning for the launch of the capital campaign should have set most of this up already, but now is the time when it all comes together. A good fundraising package is a rock-solid, professional, and compelling story of a company’s state and vision.

How Focused Energy can help prepare to raise capital

Working with a business advisor such as a fractional CFO, businesses are better able to prepare for capital raising more quickly and easily.

Focused Energy’s experienced financial team can help with due diligence, financial cleanup, and preparing the pitch deck. Not only will it give you the benefit of having someone on hand who can answer questions at a moment’s notice, but it’ll also save time preparing and interpreting critical documents for each investor being targeted.

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