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When to raise funds?

Seed fundraising becomes necessary as soon as the use of public funds (BPI, regional subsidies, various prices, etc.) and "love money" (personal contribution, friends, family) is no longer sufficient to guarantee the company's growth.

However, certain conditions are necessary to be "eligible" or at least to guarantee the success of a seed round.

Define a solid project

The growth project must be defined and consistent with the market. Your objectives must be clearly defined and quantified.

This project will then be detailed in the Business Plan.

Present significant signs of traction

Significant signs of traction are important in convincing Business Angels to invest in your project. These are tangible signs that the company is taking off, that it has found its market and that the concept is validated.

This can be the growth in turnover / turnover volume / number of users, a good retention rate, the average basket on an e-commerce platform, the signing of the first customer accounts or partnerships... The better these figures are, the faster the raising will be. However, the requirements vary according to the sector, the valuation requested or the market targeted by the startup.

In conclusion, don’t hesitate to postpone a raising of a few months to wait for a better traction because it will allow the startup to be more convincing in front of the Business Angels.

Manage your time

A seed fundraising shall be planned well in advance, as seeking funds in an emergency situation is doomed to failure. A round usually takes between 4 and 6 months, a period that can be extended until the "cash" arrives on the startups' account (signature of the agreement with the shareholders, administrative formalities to be expected...).

In conclusion, a startup must plan 6 to 9 months of cash flow before embarking on a full round.

Between our first prospecting actions and the release of funds, it will have taken 8 months. In conclusion, fundraising, whatever the amount, involves several parameters that are not necessarily controlled and that are often underestimated. This is why it seems necessary to me to anticipate all these elements and to have a good financial visibility (at least 9 months). After this period, it may be too late to control your fundraising and not find yourself in a "state of emergency" - which can lead to the failure of the operation or the devaluation of your company.

Be truly involved in your fundraising

Finally, it is essential that the co-founders are totally dedicated to the project and aware of the medium-term development of the company. This is a guarantee of seriousness but also necessary to convince private investors to invest financially (and humanely) in your project.

Updated on: 19/04/2019

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