The current fundraising environment for startups is not like anything in anyone’s recent memory. Common belief is that cash is flowing freely and valuations are up but in reality that is only for a relative few and underlying risk with sky high valuations is yet to be appreciated on downstream investment expectations.
At Eigenspace we are focused on the best possible outcome for founders as they find their path to success. With two thirds of our first cohort in a fundraising process we are acutely aware of the market as it is, at the moment. Our focus is on the founders and helping build momentum that helps them find long term success.
For founders it is important to consider that you are always selling your company to:
Other companies (exits)
Often the process you go through to raise capital from investors is the same process you will use to find customers or ultimately sell your company. Sometimes the effort you put into selling your product can turn into a different transaction than you expected -- be it an offer to buy your company, larger sales contract, or investment.
What you are aiming for is increasing the velocity of capital in your business over time. That means increasing sales or dollars invested in a predictable and controlled way that makes your business look less like gambling and more like a repeatable process.
Nothing kills a sale or investment deal quicker than sending a signal that your company is built on hope and prayers.
What we encourage founders to avoid:
Focusing on ‘Just Like Me’ companies
Developing FOMO on valuations other founders get
Blaming outside forces for missing targets
Not understanding the expected return that customers and investors expect when they give you capital
When you let the above enter your thinking can set back a founder's mindset and can be picked up by the person you are talking to.
For any type of sale, momentum will close the deal. Focus on developing your velocity and communicating that velocity. Especially in this current market, the companies with predictable momentum are going to win over the long term.
Btw, we are hosting a couple information sessions next week. Have a look at our web site and sign up if you want to learn about our second cohort!