02 May 2023
For small businesses, one of the main challenges is often finding the funding needed to progress to the next level. However, there are actions you can take to ensure your business continues to grow. This is where a funding round will come in - a process by which a company can raise capital from investors by offering equity or ownership in the company. So, what’s involved? Let's take a closer look at the process of a funding round…
It’s important to note that there are a few different types of funding rounds. These are known as Seed Round, Series A, Series B, Series C, and IPO. The type of funding round you select generally depends on the size and health of your business at the stage of seeking funding. For example, a Seed Round is for a business in the initial stages of starting up (there are also schemes in place to help start-ups, such as the Seed Enterprise Investment Scheme). However, the IPO stage (Initial Public Offering) is for much larger businesses, looking to offer stock on the public stock exchange in exchange for funds. We’re mainly going to be looking at the process of completing a Series A, B, and C funding round.
Before you begin, it’s important to understand what your funding requirements are, as well as what you may need as a minimum to progress to the next stage within your business. At this stage, it will be important to create a business plan, identify your revenue streams, and create a cashflow forecast of your future financial needs.
Once you have a detailed business plan and an understanding of what funding you need, it’s time to start building your investor network. Attend industry events, reach out to potential investors and ensure you are networking in order to create as much reach as possible. You could also consider working with a funding platform designed to connect investors with businesses.
This is your chance to convince potential investors that your business is the best company to invest their money into, by focusing on your business model, your target market, and how you plan to use the funding. Ensure that you’re also prepared to answer any questions your investors may have, including details like financial projections, your understanding of the current market/competition and any potential risks.
If you have an investor interested in your business, it’s time to negotiate your terms! This will involve details such as; the amount of investment, the equity or ownership stake they will receive, and any other terms or conditions you or the investor wishes to address. This can be anything
Congratulations! This is the time in which you can celebrate your successful funding round. It’s time to close the deal and sign an investment agreement, transferring the funds to your business. Ensure you’re also prepared to provide regular business updates to your investors.
…and there you have it! Those are the steps to completing a funding round for your business. Going through a funding round can be a time-consuming and challenging process, but it is essential if you want to take your business to the next level.
We can help you prepare for your funding round and elevate your business to the next level.Get in touch