What B2B Startups Need to Do Before They Fundraise for Series B
If your company is preparing for your Series B funding, congratulations! This means you have growth in your market and now it’s time to scale. And while this is in fact an exciting time, there are also some critical steps your business must take in order to secure the best round for your business. The average Series B round is $25 million. That’s a big number and it can be challenging to land this kind of funding if you haven’t done your due diligence on the process beforehand.
At this crucial point, investors want to see that your startup has gained traction, and they need solid proof of this growth. Investors will also expect to see a detailed business growth plan. After all, investors want to ensure that their money is put to good use and will deliver the results and returns they expect.
This blog post will walk you through the key steps that startup founders and executives should take before they fundraise for their Series B Round from investors, including: identifying the right investors; what's needed in terms of documentation; how often founders should meet with these potential investors; and how to position yourself as an attractive investment opportunity.
Ready? Let's get started!
Clearly Articulate Your Value Proposition
Every startup has a story to tell. And that story is about the value proposition and differentiation of the company. It's important for entrepreneurs to understand their own business model, as well as how they're going to market it. Investors want to hear in your pitch and see in your marketing materials that you have a clear and compelling message and that you can articulate what sets your company apart from its competitors. This should be implemented across your digital properties, where investors will certainly go for initial research. Consider how you are weaving your value proposition and key messaging across social media, your website, sales decks, your blog articles, and PR.
2. Understand Competitive Differentiation and Positioning
You built this business by offering something different than what is currently in the marketplace. Do you know your moat? It is likely that your company is not the first to do what it does, and you're probably not the best at it. In fact, there are likely many other companies who have been in business for years that offer similar products or services as your startup. Investors meet with a ton of founders so it is important that you understand competitive differentiation and positioning and can clearly communicate this to your investors. You will likely have experience in doing this already when selling to customers and articulating your story in marketing campaigns and collateral.
3. Documenting Business Impact
A case study helps potential customers see how your product or service can benefit them. Documenting business impact for clients so that these people can generate successful case studies is imperative. If you are not measuring it and cannot explain how your solutions, products or services are actually improving the bottom line, reducing costs or improving the customer experience, it will be challenging to fundraise. It’s important to demonstrate that you are meeting the need for your audience. You can also repurpose your case studies as promotional assets for lead generation
4. Know How to Get More Customers
Most investors would like to see how your customers were acquired and if you can consistently replicate the process. Being able to show that you have a repeatable lead generation and customer acquisition process is a big advantage. This will also help inform how and where you allocate and spend marketing and sales dollars. Investors would also like to see the systems or “journey” you have in place before your customer purchases, the consumption stage (satisfaction), and post-purchase. The whole “customer experience” is important to not only your customers but your investors as well.
Map the customer sales funnel, from entry to sales conversion and document the key metrics. You will want to demonstrate you understand those conversation rates so as marketers you can bring in the right amount of Marketing Qualified Leads (MQL) to support the corporate revenue targets. Include the specific digital and traditional channels that bring in your customers such as social media advertising or industry conferences. Identifying key metrics, and documenting your results is critical.
5. Invest in Public Relations and Secure an Agency
As a startup founder, you might think that hiring a PR agency is something to do after your Series B round to announce the big win. But there are some compelling reasons why it might be worth bringing in an agency 3-4 months ahead of time. This provides enough time to identify and target key influencers and reporters in your space who can help make your story resonate with investors and help get more investors interested when they come to meet with your company. Leave this important role to experts that will help you plant the seeds for a successful announcement. In addition, in a fundraise, you are marketing your business, but to investors this time and there are high stakes. What's really holding you back from making this move now?
When it comes to securing your Series B funding, it’s best to do your due diligence. This will save you time throughout the process and help you land the best option. If your startup is looking to scale your marketing efforts as you work towards your Series B funding round, get in touch with the Arch Collective team today. We’re here to help.
