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How to prepare for a funding round

Por Mateo Rouco | 07 June 2018

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The funding rounds also known as "the worst nightmare for entrepreneurs" are always followed by thousands of questions: do all startups need to have capital to grow? At what stage should funding be requested? After asking the entrepreneurial ecosystem that surrounds Spain Startup-South Summit, we offer several keys to be successful among investors: 

1. The team: fundamental, if not the pillar of the startups. To have a group of professionals with talent, experience and passion for the business idea, with an ability of projection and scalability.

2. Do I need external capital to grow? Many entrepreneurs believe that they do, especially technological startups, which need this boost to take off. But, relying on that kind of capital can be a weakness. Achieving an equilibrium is very complicated and, sometimes, an art.  

3. Who do I ask? Not everything works, it depends on the stage at which each startup is at and the amount of capital they are looking for. It is better to contact accelerators in the seed phase, but if the startup is already defined, it is always better to contact the investment funds. 

4. Who do I ask it for? The best time is when you need it the least, so you can get the best deals. In addition, what any investor is looking for is that the startup itself has chosen its project, so in the early stages it is better to opt for one’s own resources and the famous Friend´s, Family & Fool´s. 

5. What formula? The phase usually determines the format, but not necessarily. We cannot overlook other alternatives such as crowdfunding or media for equity, which are combined with the traditional ones and complete the supply of resources. 

6. Should I go if I have debts? Investors expect the startup to have debts, but do not think in advance that they will be unable to continue operating, although sometimes some will take the risk by trading down valuations.

7. Should the investor be involved? Entrepreneurs must be the ones who decide what is best for their company, they must be aligned with investors, but they should not be involved in the management of the business. 

8. Internationalisation: knowing when to go beyond national borders is very important and is an attractive aspect for investors. 

9. How do I contact an investor? First of all, the project must be analysed with a proposal and a business plan that justifies the need for expansion and future profitability. 

10. How do I find my half partner? Accelerators, incubators, investment funds or key meetings of the entrepreneurial ecosystem such as South Summit.