Thinking about fundraising?

If you are a CEO looking for capital, the idea of going out to the market and looking for venture capital financing can be scary. From the perspective of a VC helping manage an expansion stage venture capital fund, the below are some things to consider:

• Be clear on your mission and vision and make sure the senior management team and board are aligned.

• Have an operating plan that aligns with the mission and vision. Assess any gaps, what needs to get accomplished in next 12 months and determine if it is even possible relative to past performance.

• Develop a budget that reflects the operating plan. The budget will help you understand your cash needs.

• Determine whether you need to raise capital given the operating plan and what is reflected in your budget. If there is not a cash need, determine other reasons why you may want to raise capital (liquidity, cash cushion, etc.) Raising capital is a distraction from running the business, so make sure you really want to do it.

• Assess besides the capital, what do you want an investor to bring to the table: Operational expertise, network, etc.

• Identify investors that will appreciate your mission and vision. Looking at existing companies in their portfolio and networking with people to understand which investors are investing in which sectors will help. Within this pool of investors, narrow it down to the ones that have those characteristics you are looking for besides a bag of cash.

• If this is your first time raising money, realize as you take an investment you now have another person at the table. It’s a marriage, so be sure the investor is someone you want to work closely with. Also, know as you take an investment you will need to step up to a different level of maturity as it relates to formal board meetings, board packages and financial reporting.

For anyone going out to raise capital this year, hopefully the above is helpful!

Kobie