6 rules for raising capital

by | Jul 21, 2022 | Technology

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Some of the world’s most well-known companies came from humble beginnings. It’s no surprise that more people are following in these successful startups’ footsteps, with nearly 5.4 million applications filed to form new businesses in the U.S. in 2021, a 53% increase from 2019. As the economy adapts to the lingering effects of the COVID-19 pandemic, such as layoffs, industry changes and a move to remote working, entrepreneurship around the world is only expected to continue to grow. 

But a premium idea is only one piece of the puzzle, as most founders do need the confidence of crucial venture capital (VC) investors to supply the funds in building a top-of-market product and becoming a leader in the industry. 

Raising money may feel like somewhat of a formality, but has become a pivotal part of the process of building a startup. For founders who go the VC route, this can be a grueling process. So, how can founders navigate this process? 

Here is a shortlist of six rules that may help change how you think about raising capital. 

Rule #1: Know your market

Developing a deep understanding of your market and the customers you are serving is crucial — VCs will notice quickly if you don’t. Demonstrating the total addressable market to potential VC firms highlights opportunity and growth potential; while a strong customer base shows you’re creating solutions and if you have the right product for the right market.

For example, in-house legal teams are relatively unempowered by software compared to other in-house business functions such as sales, marketing, or finance. According to a recent survey, 90% of legal teams use three or more software vendors, with 77% spending over an hour per day jumping between various systems to gain a complete view of their work. These insights provide a data-driven edge that business leaders can share with VCs to help instill the confidence that they deeply understand their addressable market a …

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