Book Review: ‘The Art of Startup Fundraising’ by Alejandro Cremades
Hallelujah! Startup Fundraising demystified!
The world of financing for startups can be overwhelming and full of jargon. Most experts that you come across are unlikely to be objective and will be promoting their own agenda, which only makes the ecosystem more confusing.
Meet a venture capitalist, and they’ll tell you VC investment is the only way to grow your startup. Go to a crowdfunding event and they’ll convince you otherwise.
Questions such as:
- “Do we need an angel investor or should we find a venture capital firm?”
- “Is this accelerator a good idea for our business?”
- “What on earth do you actually put in a pitch deck?”
- “What will investors be looking for in the due diligence process?”
- “Do we even need capital right now?”
- “How do we know what our company is worth?”
are all very valid, but it’s extremely hard to get an honest, impartial answer to any of them.
And what’s worse is that female founders received only 2% of Venture Capital dollars in 2017 (source: fortune.com). The shockingly low number of women in the ecosystem can make the fundraising world seem even more intimidating for us female founders.
The only way to navigate successfully in the fundraising game is to educate yourself and ultimately go with your gut instincts. Get it wrong, and you could find yourself pushed out of your own company, or sunk in debt. Get it right, and it will be your wings to soar.
So, how to educate yourself? ‘The Art of Startup Fundraising’ by Alejandro Cremades provides a fantastic foundation of knowledge for entrepreneurs. It’s worth its weight in gold, and them some.
The book glides through the fundraising process, from crafting your pitch to understanding investment rounds, the sources of capital available and valuing your business. Real case studies are peppered throughout, so the book is a complete pratical guide to accessing capital for your startup.
A Taste of What’s Inside
Here are some of my favourite snippets:
1. Capital exists to “speed up the machine, not build it”
In other words, you should start and continue to build your startup in parallel to your fundraising efforts. You absolutely cannot wait for the capital to get started – begin by building a captive audience, close sales if possible and do whatever you can with the budget and skills you have.
2. “Find your edge, and define a metric that you can outperform on… pick your strong suit and lean in”
Don’t try to do everything to a mediocre level. You don’t have the resources to tackle everything at once, so it’s crucial to identify your strengths and double down.
3. “Most entrepreneurs give up only a few minutes too soon”
This is an extremely powerful reminder that the toughest times are usually about to yield the sweetest rewards.
4. “When you are in fundraising mode, you want to have as many people as possible talking about your startup, and you also want to be features as much as possible by the press. This is part of creating the feeling that the train is leaving the station, and it’s time for investors to get on board”.
Creating demand is absolutely crucial. You need to create that buzz which tells investors that the market is interested in what you are building and if they don’t invest, they are missing out. Investors don’t want to be in a position where they’ve missed out on the hot new start-up that everyone’s talking about.
5. “90 percent of all seed and startup capital comes from angel investors”
Alejandro describes at length the sources of capital available, from crowdfunding to friends and family, VCs and angels. He also considers the pros and cons of bootstrapping, where it is useful and understanding the limitations. Fundamentally, the book is supported with referencable data, as per the above, to support your decision making process.
If you’re seriously considering investment or you’ve decided it’s not for you – you should read this book. Pronto! As a business owner, it’s important to always be assessing your financial position and keep lines of potential financing open.
Buy The Art of Startup Fundraising’ by Alejandro Cremades here.
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