Friday, August 25, 2023
5 tactics if you're raising for climate right now.
NGL, it’s a tough time to be raising capital. 😬
The good news is, if you’re in the climate space, you’ve got a better chance than most, as investors continue to explore the massive opportunity—in terms of both impact and returns—presented by this crisis.
We’ve been hearing from angels, VCs and funds that they’re expecting a jump in the number of founders approaching them over the coming months. If this includes you, are you really ready to raise?
We’ve spent the last two years talking to investors and supporting climate founders. Here are 5 things you should keep in mind as you prepare to open your round.
#1 The early bird gets the worm.
In general, but especially in this economic climate, it’s easier to raise on momentum (i.e. “raise when you don’t need to”). So, the earlier you start preparing for your round, the better. Obviously, not everyone will have that luxury, so having as much cash stashed away as possible (9 months’ runway, ideally) before you start raising is a good benchmark.
If your runway is shorter, having (or coming up with) a plan B should be high on the agenda. Stop the bleeding, cut costs and reduce all unnecessary expenditure. Then ask yourself: what is the absolute minimum you need to get some momentum and how you’re going to get to that number?
#2 Raising is 80% organisation, 20% pitching.
This has become somewhat of a mantra for our team. What happens outside of pitching matters as much as the pitches themselves, so make sure you’re:
→ on top of your data room (cap table, financials, traction and legals)
→ building (and qualifying) your (dream) investor list and pursuing opportunities to connect with them
→ efficiently managing your investor relationships and staying on track with follow-ups
→ keeping your current investors and stakeholders engaged with regular updates.
Trust is built with more communication, not less, so sending regular updates goes a long way towards securing more support from your investors.
#3 Beware of those promising a shortcut.
Raising capital is hard work, so it’s tempting to want to outsource it all to an “expert” for a (likely substantial) cut. But, as tech investor Solai Valliappan outlines in this piece, engaging someone else to front your raise is more likely than not to present a 🚩 to investors. And, remember, you don’t have to do it alone—there is an entire ecosystem full of people who will support you on your journey, including Raaise.
#4 Keep one eye on the ball.
Don’t get so distracted by the pressures of raising that you neglect to take care of your business (and yourself)! Set aside enough time each week to listen to your team, customers and partners, and to focus on the impact you want to have in the world—it’ll serve as a good reminder of why you’re putting yourself through all this!
Always be raising! And stay open to a variety of sources of funding. Talk to angels, VCs, impact funds, family offices, your dentist (we’re only half joking here, we don’t know what your dentist is into)! The more you talk about your startup and the opportunity, the easier and more natural it gets. The most important thing is that your values are aligned, allowing you to grow and scale your impact in the way you want to.
That’s all, folks.
To end on a positive note, it’s not all doom and gloom—there is cash out there and deals are happening. Just make sure you’re as well prepared as possible before you jump into the ring.
Good luck and, if we can help at all, do reach out.