By Scott Brown
Late-stage startups are facing major fundraising headwinds, but early-stage investing is still a bright spot for startups until they hit 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 hungry for the good news a new round of financing suggests. While the market is uncertain, founders need to be ready to use their capital infusions 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 via talent acquisition and brand awareness. No matter the size of the round, securing external investment is a key milestone in many companies’ journeys, and it often takes a tremendous amount of effort. However, after putting all that work in, many founders make the mistake of letting a funding moment pass by without extracting all the value they could have.
Over the course of my 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 $1 million pre-seed rounds to $50 million raises.
Here’s my playbook for founders looking to make their “big money” moments go farther:
Rethink assumptions about fundraising news
Publicizing funding news lets you create incremental value beyond the capital investment by highlighting your momentum and driving brand awareness.
Founders may overlook the value of announcing funding news for several reasons, but the biggest 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 no one will be interested in hearing about your startup’s much smaller round.
Fortunately, that isn’t true. While big numbers may draw splashy headlines, smaller rounds can still drive interest if the announcement is executed well and you can connect the news with some larger industry/technology/societal trend.
Another reason founders hesitate is if all or part of the new capital is through a debt investment. Though it’s becoming more common, especially as VC investors pump the breaks, there is still some stigma around debt funding, and founders may worry they’ll be penalized for adding debt to their balance sheets.
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