{"id":40849,"date":"2023-10-20T15:10:23","date_gmt":"2023-10-20T15:10:23","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/five-things-you-have-to-do-before-approaching-investors-startupsmart\/"},"modified":"2023-10-20T15:10:23","modified_gmt":"2023-10-20T15:10:23","slug":"five-things-you-have-to-do-before-approaching-investors-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/five-things-you-have-to-do-before-approaching-investors-startupsmart\/","title":{"rendered":"Five things you have to do before approaching investors &#8211; StartupSmart"},"content":{"rendered":"<div class=\"td-post-featured-image\"><img loading=\"lazy\" decoding=\"async\" width=\"435\" height=\"352\" itemprop=\"image\" class=\"entry-thumb\" src=\"\/wp-content\/uploads\/2016\/01\/l_2015-12-08-jeremy-liddle--malcolm-turnbull-lr-crop.jpg\" alt=\"\" title=\"l_2015-12-08-jeremy-liddle--malcolm-turnbull-lr-crop\"\/><\/div>\n<p>Capital investment in Australia is bewildering and there are five critical steps that founders need to take before even approaching investors, CapitalPitch CEO Jeremy Liddle says.<\/p>\n<p>The Sydney accelerator and equity raiser recently raised its own seed round of $600,000, and Liddle says the investor appetite is sometimes hard to predict.<\/p>\n<p>\u201cI\u2019ve experienced both being Australia\u2019s fastest growing small business and failing to raise a Series A in the same company, which was crazy,\u201d Liddle tells <i>StartupSmart.<\/i><\/p>\n<p>Liddle finds the Australian market \u201clacklustre\u201d with 99% of applications for early-stage venture capital failing to get funding, according to a report by the Department of Industry.<\/p>\n<p>Liddle has spent more than a decade discovering how and why accessing capital is the biggest problem for startups.<\/p>\n<p>\u201cIf we want to create new industries and jobs in this century, we need to solve this problem,\u201d he says.<\/p>\n<p>Liddle says startups must complete five crucial steps before approaching investors.<\/p>\n<p><iframe loading=\"lazy\" src=\"https:\/\/w.soundcloud.com\/player\/?url=https%3A\/\/api.soundcloud.com\/tracks\/242620780&amp;auto_play=false&amp;hide_related=false&amp;show_comments=true&amp;show_user=true&amp;show_reposts=false&amp;visual=true\" width=\"100%\" height=\"450\" frameborder=\"no\" scrolling=\"no\"><\/iframe>.<\/p>\n<p>\u201cOnce you\u2019ve got all of those steps done, then you go out to market and capital raising actually becomes relatively easy,\u201d he says.<\/p>\n<h3><b>1. Get a realistic valuation <\/b><\/h3>\n<p>Liddle says the \u201cnumber one killer\u201d for founders is not having a good capital raising strategy based on an accurate valuation of their startup.<\/p>\n<p>\u201cThey\u2019ve gone and read <a href=\"http:\/\/techcrunch.com\/\" target=\"_blank\" rel=\"noopener\">TechCrunch<\/a> or UK media where the valuations are massively inflated compared to Australia,\u201d he says.<\/p>\n<p>\u201cThey don\u2019t know how much a realistic amount for their market.\u201d<\/p>\n<h3><b>2. Create a comprehensive communication set to amaze investors<\/b><\/h3>\n<p>Startups need to go beyond a simple 11-slide deck when pitching to investors, Liddle says.<\/p>\n<p>He recommends a comprehensive 20-slide deck that provides sufficient information including full due diligence, executive summary and pitch video.<\/p>\n<p>\u201cAll of that information puts you way ahead of the rest of the game,\u201d he says.<\/p>\n<h3><b>3. Find an expert to review your strategy<\/b><\/h3>\n<p>Instead of waiting to get feedback from an investor when they are denying you funding, Liddle says startups should equip themselves with expert advice in advance so they can formulate a communication approach that shows investors their strategy is world-class.<\/p>\n<p>\u201cSmart startups make sure that by the time they\u2019re in front of investors, all the T\u2019s are crossed and I\u2019s are dotted,\u201d he says.<\/p>\n<p>Because finding correct advice is a challenge in itself, Liddle recommends advisers who are serial founders or professionals that raise capital for a living.<\/p>\n<p>\u201cThere\u2019s a lot of \u2018advisers\u2019 kicking around that either don\u2019t have startup experience or do have experience raising capital and charge ridiculous fees,\u201d he says.<\/p>\n<p>Liddle says some startups can pay as much as $60,000 upfront without any results.<\/p>\n<p>\u201c[At CapitalPitch] we have a network of advisers as part of our system that we introduce the startups to at the right time,\u201d he says.<\/p>\n<h3><b>4. Create a data room <\/b><\/h3>\n<p>\u201cInvestors will always ask for financial models,\u201d Liddle says.<\/p>\n<p>At CapitalPitch they have a 70-point checklist to help startups build due diligence.<\/p>\n<p>As investors can ask questions on any of these points, Liddle says founders should have the information readily available so they can respond on the details.<\/p>\n<p>\u201cWe teach startups how to build a data room which has everything so when investors ask, you just open [it],\u201d he says.<\/p>\n<h3><b>5. Learn how to nurture leading investors<\/b><\/h3>\n<p>Raising capital is a relationship building practice, Liddle says.<\/p>\n<p>\u201cLearn how to identify and nurture really amazing lead investors that have credibility,\u201d he says.<\/p>\n<p>Leading investors are people that have built companies, are cashed up and renowned in the industry, he says.<\/p>\n<p>\u201cWhen other investors see that they are involved, they just want to follow because they\u2019d love the opportunity to co-invest in a start-up with someone like that,\u201d Liddle says.<\/p>\n<h3><b>A seed funding round<\/b><\/h3>\n<p>CapitalPitch\u2019s recently closed seed funding round is the largest amount it has ever raised.<\/p>\n<p>With the money, Liddle is aiming to help 20 startups raise an average of $1 million each through its new graduate program CapitalPitch Ventures.<\/p>\n<p>Liddle says the money means they can bring on former <a href=\"https:\/\/gust.com\/\" target=\"_blank\" rel=\"noopener\">Gust<\/a> software engineer from New York to be their chief technology officer and help them make CapitalPitch\u2019s platform world-class.<\/p>\n<p>They can also now launch into more active marketing across the country.<\/p>\n<p>\u201cWe\u2019d like to see every startup in Australia be a free member on our platform and use the free tools that we have,\u201d he says.<\/p>\n<p>CapitalPitch currently has 920 startups with six set to raise within the first half of the year.<\/p>\n<p>\u201cWe have helped six of our companies raise $11 million,\u201d Liddle says.<\/p>\n<p>\u201cSo we\u2019ve raised quite a bit of money for other companies but we are taking the appropriate strategy to raise the right amount at the right stage for ourselves.\u201d<\/p>\n<p><i>Follow <\/i>StartupSmart<i> on <\/i><a href=\"https:\/\/www.facebook.com\/StartUpSmart\" target=\"_blank\" rel=\"noopener\"><i>Facebook<\/i><\/a><i>, <\/i><a href=\"https:\/\/twitter.com\/startupsmartnow\" target=\"_blank\" rel=\"noopener\"><i>Twitter<\/i><\/a><i>, and <\/i><i><a href=\"https:\/\/www.linkedin.com\/company\/startupsmart\" target=\"_blank\" rel=\"noopener\">LinkedIn<\/a>.<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Capital investment in Australia is bewildering and there are five critical steps that founders need to take before even approaching<\/p>\n","protected":false},"author":2,"featured_media":61069,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/40849"}],"collection":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/comments?post=40849"}],"version-history":[{"count":0,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/40849\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media\/61069"}],"wp:attachment":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media?parent=40849"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/categories?post=40849"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/tags?post=40849"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}