Funding across the globe is currently at an all-time low, resulting in a "VC (venture capital) winter" that is forcing major venture-backed startups to change their behaviour. Mass layoffs have become the new norm in the technology space, making it more important than ever for founders to build companies that are resilient to such environments in the future. However, it is difficult to determine what is right or wrong in the current economic reality, which will have a lasting impact on how startups approach their burn rate, profitability, and fundraising.
In this episode, Neil Danzger shares his approach to fundraising and startup finance as a founder. Neil has worked as a fractional CFO with startups that are looking to raise funds, helping them with their business planning, forecasting, modelling, as well as fundraising.
For founders, it is now more important than ever to use their resources wisely, especially after raising funding from investors. It is crucial to remember that the money invested by the investor is not the founding team's money. To build a sustainable business in the long term, it is essential to focus on growth initiatives that yield positive results in the long run, rather than short-term perks and compensation. Defining Key Performance Indicators (KPIs) can help ensure that the teams and investors are on the same page.
Lessons for Founders:
When raising funds, asking questions such as "How can I raise funds with the help of a pitch deck and an idea?" might not be a good starting point. Nowadays, investors are compelled to think harder about their investments at every stage.
An Investor Perspective:
Investors hope that startup leaders appreciate the importance of using resources wisely.
They want to see their capital used for growth initiatives, rather than for perks or short-term compensation.
They appreciate a good balance between near-term compensation and reinvestment to create equity value over time.
Some Action Items for Founders:
Consistent investor communication is important
Develop key performance indicators (KPIs) and metrics to demonstrate the company's progress
Agree on success factors between management and investors
Avoid unpleasant surprises
Tap into investors' connections, guidance, and insight to help the company succeed.
Connect with Neil:
LinkedIn: https://www.linkedin.com/in/ndanzger/
Twitter: https://twitter.com/DanzgerGroup
Learn more about our guests and community here.
References:
http://www.paulgraham.com/guidetoinvestors.html
http://www.paulgraham.com/startuplessons.html
https://learn.angellist.com/
https://www.youtube.com/@allin
Credits:
Hosted & Created by: Prathamesh Patel
Podcast Strategy & Production: Nishi Panchal
Research & Summary: Prathamesh Patel & Nishi Panchal
Music: Ukiyo - Calling (EP)
Copyright of Sunday Pyjamas Private Limited 2023
About SundayPyjamas:
We collaborate with innovative and bold startup teams to build the future with cutting-edge technology. sundaypyjamas.com
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