You are about to embark on an exciting journey that hopefully will take your venture to the next level, giving you the muscle to realise your plans. However, before you delve head first into this time consuming activity ask yourself a crucial question. Is this the absolute best way to scale the organisation and the impact you aim for? Does growing the organisation make sense or can impact better be achieved through other strategies, for example by franchising or partnering with other organisations? If you decide to go ahead with the fundraising route these pointers will help you avoid typical rookie mistakes.
1. Raising money takes more time than you think. A typical seed round in the range of 50 000 – 500 000 GBP will take at least 1-3 months depending on your network and previous experience. Founders will have to dedicate several hours a day organising documents for the due diligence, taking meetings, evaluating investors, traveling and negotiating terms.
2. Shop around. Today’s investor scene is global, it used to be that investors needed to be within an hour’s drive of their portfolio companies. Now you can look beyond your region and make sure you target investors that truly match your market segment, geographical preferences and investment stage. Do your homework and meet as many viable candidates as possible to get the best deal and investors that are aligned with you in terms of impact vision and strategy.
3. Spot the devil in the details. When negotiating your shareholder agreement, it is imperative that you read and understand the whole text, including seemingly far fetched scenarios that can trigger obscure clauses rendering the company immobile. Spend the necessary money to have an expert explain the different scenarios than can play out and help you negotiate a fair deal. It’s worth it.
4. Demand more than just capital. A great investor adds more than zeros to your company’s bank statement. They should offer hands on operational expertise as well as opening up their extensive network to accelerate the scaling up of the company. They can also help professionalise your board shaping it into a valuable asset rather than a mere formality.
Getting your first investment is often a tough endeavour, but once successful you will have a truly valuable experience under your belt that will make raising another round that much easier. Good luck! 
This guest post was written by Richard Lindberg, serial entrepreneur from Sweden. Richard has recently set up a new venture, CongressEA which works to accelerates the shift towards impact investments in the interdependent water, energy & food sectors. 
Richard has also spoken for our Impact Investment Readiness Programme, which offers free support to London based social enterprises looking to scale.
 
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