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Last updated: 25/3/2023
Startup Fundraising Checklist
Raising money for your startup is hard. It always was and will be.
Are you ready for your startup fundraising?
Define and check technical details
Get yourself and your documents ready
Run your fundraising process
Negotiating the terms
Term Sheets - Important Details You Need to Know | by BaseTemplates
A term sheet is a non-binding document for both the founder and the investor. It outlines the terms and conditions involving an investment. There is no one-size-fits-all as to the structure of the term sheet but it has to have all the necessary details.
You can download this checklist as a PDF below
Questions VCs will ask Founders
Fundraising is hard especially if you've never gone through the process before. These questions will assist you in preparing for your journey ahead.
Most common questions your VC may ask you in the process of “getting to know more” or “due diligence”
- What is your short-term vision? (1-2 years)
- What is your medium-term vision? (3-5 years)
- What is your long-term vision? (5+ years)
- What is the monetisation strategy(business model)?
- What is your target market?
- Who are users/customers?
- What is your Unique Value Proposition?
- What are the main pain points you are trying to solve?
- What do you plan to do with the raised capital?
- Who is in your team?
- What skills and experience do they have?
- How much time are they dedicating to the startup?
- What is the equity split / how does your cap table look like?
Proof of concept and IP
- Do you have a working prototype or product?
- Are people using it, how many active users do you have?
- Can I check it out and use the platform to test it out?
- Do you have IP and how are you protecting it?
- Have you made any strategic partnerships?
- Do you have any advisors?
- What is your distribution strategy?
Sales and Traction
- What is your GTM strategy?
- Are you making money?
- What are your sales figures?
- How many active users do you have?
- Where are you finding your users/customers?
- What does your conversion/churn rate look like?
- How many organisations have been onboarded onto your platform?
- 🕵🏻♂️ 60+ questions VCs will ask
- 60+ questions you can ask VCs
See the questions also at;
In case you forget, Money doesn't grow on trees! 🕵🏻♂️ 60+ questions VCs will ask. 💸 Questions on; 🙋♂️ 60+ questions you can ask VCs.
18 Mistakes that kill startups
Paul Graham, the co-founder of Y-Combinator, was once asked “what makes startups fail?” It’s a clever question because if a person avoids doing what’s on this list, then they should survive.
Above all else, the one thing that kills your project is “not making something users want.” Everything else below can be disregarded if you aren’t making something people want.
1. Single Founder
There are very few examples of successful startups that are just one person. Even though most companies have one public-facing figurehead, there is usually a team around them. Having a team allows you to bounce ideas around and share the workload. Accountability is created when you don’t want to let your co-founders down, which can help get through the lowest of lows.
2. Bad location
Be where the experts live. Graham wrote this post in 2006 and called out a handful of US cities where startups were viable. Physical location matters significantly less in 2022, but the message remains the same - be around the “right” people. I think this can be partially substituted through online communities, but in-person connections still matter.
3. Marginal Niche
People can pick obscure and trivial problems to solve for their startup. There is usually one reason for this: avoiding competition. Any good idea is going to have competition. “You can only avoid competition by avoiding good ideas.”
4. Derivative Idea
Creating an imitation of an existing company is common, but that isn’t usually a good starting place for a company. Most successful startups are created because the founder is solving a specific unsolved problem with first-hand experience. Look for problems and imagine what it would take to solve them.
It’s important to have a vision, but a startup must be flexible. You can’t be rigid, but you can’t also pivot every week. Graham offers this barometer on when you should pivot, “If you're thinking about turning in some new direction and your users seem excited about it, it's probably a good bet.”
6. Hiring Bad Programmers
Can’t add much more to this one. If you aren’t a programmer, then the best thing is to get a programmer that can hire good ones. The only problem is how do you end up with the first good programmer? Tough nut to crack that requires a little bit of luck for non-programmers.
7. Choosing the Wrong Platform
A platform is a foundation for your startup. Graham refers to platforms in terms of technology (e.g., operating system or programming language), but this good be broader. Whatever you are building on top of you’ll want to make sure it supports the structure above.
8. Slowness in Launching
Launching quickly forces you to finish the work. “Nothing is truly finished till it’s released.” Releases allow you to get feedback from your users to begin the iteration process. Nothing will ever be perfect when it’s launched.
9. Launching Too Early
Launching too slowly has killed more startups rather than launching too fast, but it is possible to launch too quickly. What’s the minimum you need to launch? Graham writes, “identify a core that's both (a) useful on its own and (b) something that can be incrementally expanded into the whole project, and then get that done as soon as possible.”
10. Having No Specific User in Mind
The problems we understand the most are the ones we encounter. Building something for yourself simplifies the issue of creating something users don’t want. You can always build for users other than yourself, but you’ll need to be consistently checking that you are staying the course.
11. Raising Too Little Money
Raising capital creates a runway. Once the runway is up, you are either airborne or dead. More money allows for a longer runway to get airborne. Being “airborne” has different meanings for different situations.
12. Spending Too Much
The most common way of spending too much is hiring too many people. Graham has 3 suggestions about hiring:
- Don’t hire if you can avoid it
- Incentivise with equity rather than salary
- Only hire people to write code or will acquire users as those are the only things you need at first
13. Raising Too Much Money
“When you raise a lot of money, your company moves to the suburbs and has kids” The culture changes from just founders to bringing in employees. Employees aren’t as dedicated. Having money creates inertia because more people are involved. That being said, capital is needed to scale, but adequate thought needs to be put in place before this decision is made.
14. Poor Investment Management
As founders, you want to spend as much of your time on product development rather than managing relationships with your investors. As long as things are going well, your investors should remain fairly quiet and allow you to chart your own path. The problem is that things rarely go smoothly in startups.
15. Sacrificing Users to (Supposed) Profit
Making something that people want is much harder than creating a business model. You need to put your product first, then you can think about profits. It’s irresponsible to not think about a business model, but if you can’t create something people want then your business model doesn’t matter.
16. Not Wanting to Get Your Hands Dirty
If you can be the one who attracts users, you’ll have a much greater chance of succeeding. Product development is most important, but business activities will need to happen if you want to translate your idea into a company.
17. Fights Between Founders
Most disputes aren’t about the situation, but rather the people involved. This is why the choice of co-founders is critical. “The people are the most important ingredient in a startup, so don't compromise there.” Disagreements are going to happen, but you want to have a team that won’t implode over them.
18. A Half-Hearted Effort
The most common failed startups are the ones we never hear about. Friends working on a side project but were never able to fully dedicate the energy required to it. Most successful founders quit their jobs and most failed ones don’t. That doesn’t mean that everyone should quit their jobs, but it’s very hard to give a startup the required time and attention if it isn’t a top priority.
Link to the full article by Paul Graham.
The 18 Mistakes That Kill Startups
October 2006[[[[[[[[[[[[[ In the Q & A period after a recent talk, someone asked what made startups fail. After standing there gaping for a few seconds I realized this was kind of a trick question.
PS: The article may be from 2006, but is still very relevant and realistic!
The Complete Guide to Building a Winning Pitch Deck
You can also download the guide on BaseTemplate. Use the link below 👇
Free Guide: How to Build a Winning Pitch Deck - BaseTemplates
Maintaining your enthusiasm and passion for the seed of an idea while you rebound from one investor to the next is exhausting. Therefore, we designed this helpful guide to walk you through the basics, introducing the concept of the pitch deck, its advantages, and uses, as well as providing advice and support on planning, design, pitching, and choosing investors.
Happy founding and fundraising 😃
This resource is in collaboration with our friends at Base Templates.
BaseTemplates supports founders with their fundraising templates, pitch deck templates, financial modelling templates and a whole lot of tools and resources for both investors and founders to make the whole process of fundraising “easy as butter”
BaseTemplates: Pitch Deck & Fundraising Templates
High-quality fundraising templates for entrepreneurs that help save time and money starting a business. Our Pitch Deck & Financial Model templates are editable with PowerPoint, Keynote, and Google Slides. Start saving time & money now by using one of our professional pitch decks instead of building everything from scratch.