Thinking of raising growth capital in 2023? Now’s the time to start laying the groundwork for an efficient, effective raise. We asked Cyndx founder and CEO Jim McVeigh, who has over twenty years of capital raising experience, what early-stage entrepreneurs should do to prepare for the year ahead.
Keep reading to learn what you should prioritize as you prepare to enter the market, mistakes to avoid, and favorable trends for raising growth capital in 2023.
What can entrepreneurs do now to put themselves in a stronger position for growth and raising capital in 2023?
Year-end planning will be critical to success in the new year. Plan ahead. Be sure to have at least six (6) months of capital and plenty of lead time for all of the operational things you’re working on.
Begin making relationships now. Engaging with people when you aren’t asking for anything is always easier, you will be surprised how much they will volunteer and how much you will learn. Investors are inherently cautious, and it will take time (longer than you think) for them to feel confident and ready to invest in what you are selling them.
Assume that whatever you tell them they will remember and ask you about it later. Listen closely and if they make a suggestion or give a recommendation, be sure to follow-up and let them know how you’re progressing.
Lastly, be sure to establish a strong relationship before talking numbers or asking them for anything. A lot of people don’t take the time to build relationships, and that is the key to all of this.
What are the top mistakes/pitfalls to avoid for a successful capital raise in the year ahead?
Don’t overpromise! If you overpromise, you almost surely under deliver and create a sense of doubt in your potential investor. It can be very easy to agree to more than what you are capable of providing when you have a lot of enthusiasm for what you do but try to not let this get in the way of being honest and transparent with your customers and partners. Being excited about what you’re creating is natural, but just remember to keep things in perspective.
Don’t overestimate your revenue or speed at which you will achieve certain milestones. You should always be cognizant of the reasons why someone should not invest in you and the challenges that lay ahead. If they do not think you can solve those challenges, they will never be the right partner for you. You need someone who is all in, and don’t be afraid to say no when things don’t feel right.
What early-stage funding trends do you expect in 2023?
There are a few trends that I think offer opportunities for startups, namely the growth in alternative financing and other sources of capital. While venture capital will always be an important source of funding, a number of alternative sources like family offices or strategic investors can provide an attractive alternative, often these alternative sources will be less dilutive.
Obviously new technologies remain an important trend. New solutions or technologies like ChatGPT are emerging which give small entrepreneurs access to the same level of intelligence larger, more established companies get from Wall Street. These technologies can have the ability to influence every aspect of your business.
For example, Cyndx empowers entrepreneurs to make more informed decisions throughout a funding round. We recently launched Cyndx Valer (corporate valuation tool) to compliment Cyndx Raiser (rapidly identifies a list of relevant investors). The products work together to contribute to a capital raise that costs less time and money—two of a founder’s most valuable resources.
