What's Happening?
TechCrunch has emphasized the importance of startup founders preparing for late-stage fundraising from the outset of their ventures. During the TechCrunch Disrupt event, Aven co-founder and CEO Sadi Khan advised founders to strategize for later rounds
of funding even before securing initial seed money. This approach helps founders understand the capital requirements for scaling their businesses and allows them to build relationships with potential investors early on. Lila Preston from Generation Investment Management and Zeya Yang from IVP also stressed the value of early relationship-building with investors, which can facilitate quicker closing of later-stage rounds. Founders are encouraged to leverage their existing investor networks to connect with venture capitalists who can support future funding stages.
Why It's Important?
The advice provided by industry leaders at TechCrunch Disrupt is crucial for startup founders aiming to secure substantial funding in later stages. By planning ahead and establishing relationships with investors early, startups can ensure a smoother transition through various funding rounds. This proactive approach can lead to better alignment with investors who understand the business and its market, potentially adding value before formal investment. As later-stage rounds close more rapidly, having established connections can expedite the process, benefiting both founders and investors. This strategy is particularly significant for capital-intensive startups that require substantial funding to scale effectively.
What's Next?
Founders are encouraged to start building relationships with potential later-stage investors at least two years before needing the capital. This timeline allows investors to familiarize themselves with the business and its growth trajectory. As startups progress, they should continue nurturing these relationships, sharing their vision and milestones without necessarily disclosing detailed metrics initially. By doing so, founders can position themselves favorably for future funding rounds, ensuring they have the necessary support to achieve their growth objectives.
