When a startup is raising funding, a founder can feel like the fundraising process for startups is another full-time job. How can startup founders efficiently manage the funding process from due diligence to actively raising capital and closing the campaign? In this blog, we’ll talk about the general fundraising steps and some ways to efficiently manage fundraising while balancing the many responsibilities that fall on startup founders.

How to Efficiently Manage Fundraising

The Fundraising Process

At MicroVentures, the fundraising process generally follows the same steps whether a startup is raising capital through Regulation D or Regulation Crowdfunding exemptions.

Company submits fundraising application on the MicroVentures website
MicroVentures team assesses the application, requests additional materials if needed, makes the decision whether or not it’s a good fit, and an engagement agreement is signed
Company undergoes the due diligence process, providing documentation as needed to the MicroVentures team to conduct due diligence and prepare the fundraise
Fundraise goes live and actively accepts investments
If successful, the fundraise closes and the funds are wired to the company

From start to finish, the entire process can take anywhere from 8 to 26 weeks, or even longer depending how long the campaign is live. Regulation D campaigns are typically a shorter due diligence process and longer live period while Regulation Crowdfunding campaigns are typically longer in terms of due diligence and time actively raising funds.

Materials to Provide

So, what materials can startup founders expect to provide when undergoing the due diligence part of the fundraising process? The following is a list of materials that are typically required in order to undergo the funding process:

Pitch Deck
Business Model
Information needed to run background checks for officers, directors, and 20%+ owners
Monthly financials since inception
Financial projections
Detailed current cap table
Anticipated use of funds
Information about previous funding rounds including amounts, price per shares, valuations

Managing the Process

With a significant number of materials to provide as part of the fundraising process in addition to the general day-to-day tasks of being a startup founder, how can founders efficiently manage this process?

Set Clear Priorities

There is a reason a startup founder is undergoing the fundraising process. Typically, the motivation is to have capital to scale up production, develop new products, hire additional team members, ramp up marketing, find new markets, or other startup goals. A startup founder should set a clear focus and outline the priorities of why the funds are necessary in order to stay focused on the next to-do list item.

Designate Time Blocks

While it can feel like a founder is running around trying to manage and do everything, one way to manage the fundraising process is to designate specific time blocks. Breaking down the required steps across different days can make the fundraising process feel more manageable. Spending one hour a day gathering the materials for the due diligence process or designating 30 minutes a day to message investors about the investment opportunity.

Stay Organized

At MicroVentures, we typically recommend that a startup founder sets up a data room to share with the team. This can help facilitate smoother file transfers in a secure manner for sensitive data like financial statements. In order to populate the data room, a startup founder should consider keeping these documents in an organized manner so that once they are requested, it is a quick and simple process to upload the file to the data room.

Respond Promptly

One of the main reasons the due diligence process can take a longer period of time is due to slow communication. We understand that there are a lot of responsibilities that come with being a startup founder, but we can only move as quickly as you do. Staying organized with file management and setting time blocks to respond to due diligence requests can help speed up the communication process and help get a campaign live faster.

Be Proactive

Being proactive can be one of the largest benefits of fundraising. Once a startup founder is aware of the materials they will need to provide at different parts of the due diligence process, being proactive to gather those materials can help make the due diligence process more efficient and faster.

Additionally, once your campaign is live, proactively reaching out to investors can also help your campaign. One of the biggest misconceptions about raising capital is that “if you list it, they will come”. However, that is not always the case. Proactively reaching out to investors can help a startup reach its funding goal and gain access to the funds it needs to grow and scale.

Final Thoughts

While the fundraising process can seem daunting, from the lengthy timelines and long list of materials to provide, there are ways for a founder to efficiently manage the process on top of the long list of responsibilities of being a startup founder. From time blocking and being proactive to staying organized and responding promptly, there are ways for startup founders to make the process smoother. By leveraging these tips, founders can help speed up the due diligence process so they can start actively raising funds and in the case of a successful campaign, receive the funds raised.

Want to learn more about tips for startups looking to raise capital? Check out the following MicroVentures blogs to learn more:

Is your startup ready to raise capital? Apply today to raise funding with MicroVentures!

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The information presented here is for general informational purposes only and is not intended to be, nor should it be construed or used as, comprehensive offering documentation for any security, investment, tax or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest, directly or indirectly, in any company. Investing in both early-stage and later-stage companies carries a high degree of risk. A loss of an investor’s entire investment is possible, and no profit may be realized. Investors should be aware that these types of investments are illiquid and should anticipate holding until an exit occurs.

MicroVentures Blog

From Idea to Investment: How to Efficiently Manage Fundraising