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A realistic timeline for startups to raise funds successfully

Fundraising is exhausting. And sometimes really tedious. With luck, it only takes a month. Sometimes it also runs over nine months. I’ve met a lot of founders who had no real idea how many steps it takes until the money is actually in the account. Here is my optimistic fundraising timeline of 128 days, from “We need money!” To “The money is finally in the account!”.

At some point the founder realizes the need of further financing. Ideally, he does not state this three weeks before the end of the runway, but a few months earlier. If you have a good overview of cash flow, burn rate and runway, you should be able to see at an early stage when funding is needed. Because getting funding can take time.

Day 1-30: What is my story?

Which essential problem do we solve? Why is our solution working right now? Why are we the right team for that? And what drives us? If you want to get funding, you need a strong equity story that answers the questions above. From this the pitch deck is developed.

Day 31-35: Create the list of suitable investors and finalize the pitch deck

If you want to start successfully in fundraising, you have to be well prepared. Founders should ask themselves: Which investors are right for my startup? Do you invest in my vertical? Am I on the right stage? At the same time, the pitch deck was to be finalized.

Day 35-65: Get intros and attend events

We as B10 have never invested in a startup whose team we did not meet at an event before or was introduced to us through an intro it’s similar to other investors. Accordingly, the founder should consider how he gets in contact with his desired investors  cold mailing should only be used in an emergency.

Day 66: Crisp elevator pitch with the right investor

Before the pitch deck is sent to the various investors, the investor should be addressed personally at events or through an intro. So he has the same startup in the head. If the elevator pitch then also sits, the investor will deal with the pitch deck.

Day 67: Pitch deck with the right contact person at the investor’s table

Sometimes startups get a rejection for a simple reason: the pitch has landed at the wrong partner of the VC. Therefore, the startup should first research well, which person is responsible for which topic.

Day 74: Invitation to pitch comes

The own story works, the investor finds the topic exciting. The joy is correspondingly big. Unfortunately, an invitation to pitch does not always mean that the investor really wants to invest. Again and again, investors invite teams, although they know beforehand that they will not invest.

Day 81: Pitch with the investor, ideally with the partners

The day of the pitch has arrived. Now it is time to go confidently and well prepared for the meeting. One thing is especially important: Enthusiasm attracts investors from you and your topic, but does not pretend to them what does not exist – they would learn it anyway at a later date.

Day 82-85: Investor works deeper into pitch after pitch

Day 86: Investor’s decision to invest in the startup

Typically, VCs make the investment decision during the partner meeting. This usually takes place every Monday.

Day 90: Investors suggest a term sheet

The investor wants to invest in the startup and proposes the terms in the form of a term sheet.

Day 91-94: Negotiating the term sheet

Here the cornerstones of the investment are negotiated – this is the most important negotiation of a financing round for both sides. In addition to the total investment and the shares, there are liquidation preferences and per-emption rights in particular.

Day 95: The final term sheet is signed

The key data of the investment are negotiated and the term sheet is signed by all parties. Although it is a non-binding commitment, the terms retained are rarely renegotiated unless there are irregularities in due diligence (DD). Key data includes total investment, valuation, liquidation preferences, vesting, ESOP, investor rights, pre-emption and co-sale rights and obligations, as well as veto rights and warranties.

Day 96-100: Due Diligence by the New Investors (Financial, Legal, Tech, Team)

During the due diligence, the investors check the startup sometimes more, sometimes less detailed. The better the startup is prepared for the DD and has all the relevant data and documents ready, the faster it will be carried out.

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Day 96-100: Creating the contracts

Parallel to the due diligence, the lawyer of an investor or the startup takes over the drafting of the contracts. Here, in the negotiations and in the term sheet related, this is poured into a contract. If this takes over from an experienced law firm, it rarely takes more than two to three rounds of feedback to satisfy all parties and finalize everything.

Day 110: Finalize the statutes and all annexes (ESOP plan, GF contracts, IP lists, list of MA, business plan)

Day 111: The very last check

Are all the numbers mentioned correct? Is the cap table without miscalculation? Do company data like the HRB number? Are all powers available? If now a mistake is overlooked, it can come later with the notary to problems.

Day 112: Contracts finally negotiated and accepted and released by all parties

Day 113: Notary meeting is due

Finally the time has come: The negotiations of the past weeks are sealed by the notary. He reads all the relevant documents and makes sure that all shareholders sign correctly. It often happens that one of the parties wants to renegotiate certain terms during the meeting be it because they have only been understood now or because they are not yet satisfied with the terms.

Day 114: Followup after the notary session

The complete documents and PDF copies of the documents are sent by the notary to all shareholders. In addition, investors are officially advised to transfer the share capital.

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Day 115-116: Investors transfer share capital

Ideally, investors transfer the share capital immediately upon receipt of the documents.

Day 117: Founder notary announce full deposit of new share capital

Day 118: Notary announces capital increase at the commercial register

Only when the commercial register enters the capital increase is the investor officially a shareholder. And yes, in Germany it takes a week.

Day 125: Capital increase is registered in the commercial register

Day 126-127: Investor transfers the investment

The actual investment meaning the payment into the capital reserve – is transferred by the investors to the account of the company.

Day 128: The money is in the account!

It was a long way to go, but at last the money is in the bank and growth can continue.

Also published on Medium.

Published inStartups

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