Mighty Digits’ Post

Is your Startup looking to raise capital from investors? We prepared this guide to help you Here are 10 things you’ll need 👇 1️⃣ A financial model Some call this a pro forma Others use of proceeds model They all represent the same thing… A blueprint for how you will make the future a reality 2️⃣ Your historical financial statements Investors want to understand what is currently & historically happening with your startup They’ll also want to understand all sorts of things like how much cash you have in the bank... how much money you're spending... how much debt you have... just to name a few... 3️⃣ A pitch deck This is where you’ll combine all of your data on your product, market, team, financials, and much more 4️⃣ Your cap table This will help investors understand who else has shares in your company, and at what price per share 5️⃣ Your formation documents Investors like to review this information to ensure everything was set up properly and there will be no surprises down the road 6️⃣ Additional Financial Data Investors love analyzing all sorts of financial metrics that won’t be found in your financial statements Common ones can include Customer Acquisition Cost (CAC), Net Retention Value, ARR / MRR 7️⃣ A competitive moat Think you got the most amazing idea? It won’t be long till your competitors learn about it The more defensible your idea, the more attractive it will be for investment 8️⃣ A large opportunity VCs don’t care about companies that generate profits in the hundreds of thousands each year They care about companies that can eventually be sold for the hundreds of millions (if not billions) 9️⃣ A strong founding team This may be the most attractive thing for investors The more experienced your team And the more institutional knowledge your team has on the market The infinitely more attractive you will be for investment 🔟 An appetite for failure Often times it’s the last key on the chain that opens the door Entrepreneurship is all about constantly iterating until you reach your desired income That means getting used to a ton of failure, each and every day That’s our take on 10 things your startup needs to raise capital What would you add? Let us know in the comments below

5 Red Flags Investors Look For in Startups (And How to Avoid Them) Investors are sharp. They’ve seen it all, and they know what to avoid. If you’re a startup founder pitching for funding, 𝐛𝐞𝐰𝐚𝐫𝐞 𝐨𝐟 𝐭𝐡𝐞𝐬𝐞 𝐫𝐞𝐝 𝐟𝐥𝐚𝐠𝐬 that could turn them away: 1️⃣𝙇𝙖𝙘𝙠 𝙤𝙛 𝙈𝙖𝙧𝙠𝙚𝙩 𝙐𝙣𝙙𝙚𝙧𝙨𝙩𝙖𝙣𝙙𝙞𝙣𝙜 If you can't clearly explain your market, why should investors bet on you? 𝗙𝗶𝘅 𝗶𝘁: Do your homework. Know your customer, competitors, and growth potential inside-out. 2️⃣𝙒𝙚𝙖𝙠 𝙁𝙞𝙣𝙖𝙣𝙘𝙞𝙖𝙡 𝙋𝙧𝙤𝙟𝙚𝙘𝙩𝙞𝙤𝙣𝙨 Investors need to see you understand your numbers. Overly optimistic projections with no basis? 🚩 𝗙𝗶𝘅 𝗶𝘁: Be realistic. Show a clear, achievable roadmap backed by data. 3️⃣𝙉𝙤 𝘾𝙡𝙚𝙖𝙧 𝘿𝙞𝙛𝙛𝙚𝙧𝙚𝙣𝙩𝙞𝙖𝙩𝙤𝙧 “Another product like XYZ” doesn’t cut it. Investors want innovation, not replicas. 𝗙𝗶𝘅 𝗶𝘁: Clearly articulate your unique value. Highlight what sets you apart and why it matters. 4️⃣𝘿𝙞𝙨𝙤𝙧𝙜𝙖𝙣𝙞𝙯𝙚𝙙 𝙋𝙞𝙩𝙘𝙝 𝘿𝙚𝙘𝙠 Cluttered slides or unclear messaging? Immediate turn-off. 𝗙𝗶𝘅 𝗶𝘁: Keep it concise and impactful. Use visuals to tell your story, not overwhelm it. 5️⃣𝘾𝙝𝙖𝙨𝙞𝙣𝙜 𝙦𝙪𝙞𝙘𝙠 𝙘𝙖𝙨𝙝 Investors can sense desperation. If founders are only focused on securing immediate cash, rather than building long-term value, it’s a major red flag. 𝗙𝗶𝘅 𝗶𝘁: Shift the focus to long-term vision. Showcase a strategy that prioritizes sustainable growth over quick wins. Demonstrate a clear path toward scaling Before you pitch- Do a self-check. Because remember: Investors don’t just invest in ideas—they invest in founders who are in it for the long run. Eliminating these red flags can actually take you from “We’re passing” to “We’re interested” P.S. We have helped hundreds of startups avoid these gaps and raise funding. Are you ready to secure that funding? Fill the form below to know how we can help. ▶ https://lnkd.in/gABtEuY7

5 Red Flags Investors Look For in Startups (And How to Avoid Them) Investors are sharp. They’ve seen it all, and they know what to avoid. If you’re a startup founder pitching for funding, 𝐛𝐞𝐰𝐚𝐫𝐞 𝐨𝐟 𝐭𝐡𝐞𝐬𝐞 𝐫𝐞𝐝 𝐟𝐥𝐚𝐠𝐬 that could turn them away: 1️⃣𝙇𝙖𝙘𝙠 𝙤𝙛 𝙈𝙖𝙧𝙠𝙚𝙩 𝙐𝙣𝙙𝙚𝙧𝙨𝙩𝙖𝙣𝙙𝙞𝙣𝙜 If you can't clearly explain your market, why should investors bet on you? 𝗙𝗶𝘅 𝗶𝘁: Do your homework. Know your customer, competitors, and growth potential inside-out. 2️⃣𝙒𝙚𝙖𝙠 𝙁𝙞𝙣𝙖𝙣𝙘𝙞𝙖𝙡 𝙋𝙧𝙤𝙟𝙚𝙘𝙩𝙞𝙤𝙣𝙨 Investors need to see you understand your numbers. Overly optimistic projections with no basis? 🚩 𝗙𝗶𝘅 𝗶𝘁: Be realistic. Show a clear, achievable roadmap backed by data. 3️⃣𝙉𝙤 𝘾𝙡𝙚𝙖𝙧 𝘿𝙞𝙛𝙛𝙚𝙧𝙚𝙣𝙩𝙞𝙖𝙩𝙤𝙧 “Another product like XYZ” doesn’t cut it. Investors want innovation, not replicas. 𝗙𝗶𝘅 𝗶𝘁: Clearly articulate your unique value. Highlight what sets you apart and why it matters. 4️⃣𝘿𝙞𝙨𝙤𝙧𝙜𝙖𝙣𝙞𝙯𝙚𝙙 𝙋𝙞𝙩𝙘𝙝 𝘿𝙚𝙘𝙠 Cluttered slides or unclear messaging? Immediate turn-off. 𝗙𝗶𝘅 𝗶𝘁: Keep it concise and impactful. Use visuals to tell your story, not overwhelm it. 5️⃣𝘾𝙝𝙖𝙨𝙞𝙣𝙜 𝙦𝙪𝙞𝙘𝙠 𝙘𝙖𝙨𝙝 Investors can sense desperation. If founders are only focused on securing immediate cash, rather than building long-term value, it’s a major red flag. 𝗙𝗶𝘅 𝗶𝘁: Shift the focus to long-term vision. Showcase a strategy that prioritizes sustainable growth over quick wins. Demonstrate a clear path toward scaling Before you pitch- Do a self-check. Because remember: Investors don’t just invest in ideas—they invest in founders who are in it for the long run. Eliminating these red flags can actually take you from “We’re passing” to “We’re interested” P.S. We have helped hundreds of startups avoid these gaps and raise funding. Are you ready to secure that funding? Fill the form below to know how we can help. ▶https://lnkd.in/g94hNhYG

Unlocking Growth: Leveraging Equity for Your Startup Securing funding for your startup is pivotal, and leveraging equity can be a game-changer. Here's why: Access to Capital: Equity financing opens doors to investors willing to support your vision, providing the funds needed to fuel growth. Aligned Interests: Shareholders become partners invested in your success, offering valuable insights and connections. Flexible Terms: Unlike loans, equity investments don't come with fixed repayment schedules, easing financial pressure on startups. Potential for Growth: With capital infusion, startups can scale operations, invest in R&D, expand, or hire key talent. But remember: Valuation: Determine a fair valuation to attract investors while maintaining a stake in your company. Investor Relations: Build trust through clear communication and shared vision. Dilution: Understand the trade-offs between raising capital and retaining control. Compliance: Ensure legal and regulatory compliance to mitigate risks. In conclusion, leveraging equity strategically can propel your startup forward. It's not just about securing funds—it's about building relationships and creating value for all stakeholders. Keep innovating, keep striving, and believe in the power of your ideas!

7 red flags investors look for before deciding to invest: 1. Too Many Founders: While sharing responsibilities is beneficial, having too many founders can be problematic, especially if many lack experience. This can raise questions about the efficient management of the startup. 2. High Costs: If your operational costs are excessively high or your profit margins are too thin, investors will be concerned about the financial sustainability of your business. 3. Overuse of Buzzwords: Buzzwords may sound appealing, but investors prefer substance over style. Focus on providing solid, substantive plans rather than trendy jargon. 4. Other Commitments: Investors seek founders who are fully dedicated to their startup. They are wary of those who treat the venture as a side project or part-time endeavor. 5. No Other Source of Income: Investors fund startups to fuel their growth, not to support the personal lifestyles of their founders. They expect their investment to be used prudently and solely for the benefit of the startup. 6. Weak Marketing: Effective scaling requires careful planning. If marketing is not your strength, it’s advisable to seek guidance to improve this critical area. 7. Sole Reliance on Paid Ads: While paid advertisements can amplify successful strategies, relying on them exclusively is risky. It’s important to have a robust plan for generating revenue independently of funding. P.S.: We just launched a free pitch deck guide. It’s meant for entrepreneurs looking for help with building a pitch deck. You can get it on my profile!

Startup pre-seed investment is a complex art. In my view it’s a five key phases: 1. Deal Origination: - the first step, finding the deals. Sources: cold calls, referrals, active search, in short NETWORKING 2. Screening: As the famous quote of Warren Buffets says invest in your knowledge zone, screen promising opportunities basis your areas of knowledge. 3. Evaluation: - A deeper dive into the business opportunity. Both Macro and company level details, specifically the team behind the startup must be evaluated 4. Structuring: - If the startup passes evaluation, the deal shall be structured right for both investors and startups, negotiations on equity share, compensation, use of funds and protective covenants. 5. Post-Investment Activities: - Investors don't just provide capital; they offer support and guidance. Mentoring, access to market, access to next round of investors etc

7 Startup Valuation Methods Credits to Bojan Radojicic  follow him for more finance insights! ~~~~~~~~~ 𝙏𝙝𝙚 𝙤𝙧𝙞𝙜𝙞𝙣𝙖𝙡 𝙥𝙤𝙨𝙩 𝙞𝙨 𝙝𝙚𝙧𝙚: 7 Excel models to demystify a valuation of any startup. No guesswork and bias. Download Excel: https://lnkd.in/d_tV26Si ~~~~ 𝗦𝘁𝗮𝗿𝘁𝘂𝗽 𝗳𝗼𝘂𝗻𝗱𝗲𝗿𝘀: fueled by passion, innovation, and big dreams. But amidst all the creativity and enthusiasm, there's a critical aspect that often takes center stage: Startup Valuation! 💼 Understanding the value of a startup is more than just a number. It's a strategic compass that guides your fundraising efforts, informs investment decisions, and shapes your company's trajectory. Here's why startup valuation is a crucial piece of the puzzle: 1️⃣ Fundraising and Investment Decisions 2️⃣ Equity Allocation and Employee Incentives 3️⃣ Strategic Growth Planning 4️⃣ Acquisitions and Partnerships 𝗪𝗛𝗔𝗧 𝗜𝗦 𝗜N𝗖𝗟𝗨𝗗𝗘𝗗 𝗜𝗡 𝗧𝗛𝗜𝗦 𝗘𝗫𝗖𝗘𝗟 𝗠𝗢𝗗𝗘𝗟: • 7 methods: explanation of when the method is appropriate to use and valuation calculation under given assumptions • Discounted cash flow method • Valuation by multiple (EBITDA or Revenue/ARR) • Comparable companies method • Replacement cost method • Net book value method • Berkus method • Venture capital method • Summary of all methods results ~~~~~~~~~~~~~~

Most start-ups fail owing to a lack of financial knowledge or financial mismanagement. Many startups struggle to manage their cash flow efficiently. This includes insufficient operating cash to support operations, poor planning, and failure to account for unexpected expenses. Obtaining adequate funds is a regular difficulty. Startups sometimes misjudge the amount of cash required to achieve profitability, resulting in premature shutdowns.  Inadequate financial planning might lead to overestimated earnings and underestimated expenses. This causes financial shortages, which might be deadly to the business. Failure can occur when a business model fails to generate enough revenue to cover costs or is not scalable. Failure to discover and diversify revenue streams can hinder development and sustainability.   Additionally, non-financial factors can cause startups to fail, such as when they create a product or service that does not address a significant problem or market need. Even if there is a market demand, failing to connect the product or service with customer demands and preferences might result in failure. Finally, starting in a highly competitive market is not ideal for entrepreneurs.  

Seven Valuation methods for start up companies

🚀 Bootstrapping vs. Funding: Which Path Should Your Startup Take? 🤔 Are you thinking of taking your business to the next level? If yes the critical question becomes: Which path should you take to achieve success for your venture? Should you opt for Bootstrapping or seek funding? Let's look at the pros and cons of each of the approaches; 👢 Bootstrapping: Businesses grow from the money they generate and that is reinvested into the business to fuel further growth and expansion. This approach means relying on personal savings, revenue generated by the business, or small loans to fund operations and growth. Pros: ✅ Autonomy: You call the shots. No need to answer to investors. ✅ Lean Operations: Forces efficiency and smart spending habits. ✅ Ownership: You retain full control of your vision and equity. Cons: ✅ Limited Resources: Growth may be slower due to financial constraints. ✅ Risk: Personal finances are on the line, and failure could have significant consequences. ✅ Scaling Challenges: Expansion may be restricted without external capital. 💰 Funding: Opening the doors to investors in exchange for capital to accelerate growth. Pros: ✅ Rapid Growth: With more capital, you can scale quickly. ✅ Access to Resources: Investors bring expertise, connections, and mentorship. ✅ Mitigated Personal Risk: Your personal finances are less exposed. Cons: ✅ Loss of Control: Investors may have a say in strategic decisions. ✅ Pressure to Perform: Expectations to deliver returns can be intense. ✅ Dilution of Equity: Giving up shares means sharing future profits. So, which path is right for your startup? 🤔 It depends on your vision, resources, risk tolerance, and growth goals. Some thrive under the bootstrapping model, while others soar with funding. The key is to weigh the pros and cons carefully and choose the approach that aligns best with your long-term objectives. 💼 #StartupFinance #Bootstrapping #FundingJourney #FinanceInsights 🚀