How to raise capital for your SaaS business in 2023?

Tekpon Author - Alexandru Stan

I know the market is full of advisors and people who will charge you good money to teach you how to run things for your business to succeed. Or how to reach the point where you can say you’re running an entire functional business.

But let me tell you that the best advisor is you and what you feel, and then the people that have a business and have struggled with different situations or obstacles. There is no better example than the experience of a CEO who has been on this road – from one idea to creating a business and all the good and less good situations he has been in for his ideas and his team.

As a serial entrepreneur with extensive experience in startups and funding, I have been through various challenges, exits, and successes. And if there is something that I’ve learned from all these experiences, you have to give something back to the people to succeed. Thus, I want to share my knowledge and expertise with early-stage startups because I know how it is when you need good advice and no one is sharing.

One of the first things you need to build a successful SaaS startup is the financial part—so, raising capital. Funding is necessary to develop your product, build your team, and scale your business. However, raising capital can be daunting, especially for first-time founders. In this Expert Panel article, I will share some of the most effective fundraising strategies at different stages of your SaaS startup. How was the saying? Sharing is caring.

STRATEGY for STARTUPS when founders only have the IDEA

The first step in developing a SaaS startup in its early stages is to produce an MVP (minimum viable product). Also, to learn more about the startup language and how to build a pitch deck and business plan, you can join startupschool.org and other free tech and SaaS forums. And this is another piece of advice for all the founders: feel free to ask questions and look for outside help.

You can now ask your friends and relatives for financial support, which might be as little as $5k. That if you have a lovely family with a good financial situation. If they have other plans with the money or don’t have them, you’ll have to be the fuel and work extra for that first money you will invest in your idea. But you must firmly believe and go for it with all the risks!

Moreover, you can also apply to Y Combinator, which makes a $500,000 investment over two steps: in exchange for 7% of the business, they spend $125,000 on a post-money SAFE and then $375,000 on an uncapped safe with a Most Favored Nation (“MFN”) clause (the “MFN safe”).

STRATEGY for STARTUPS when they have their first happy CLIENTS

If you reached this point, you’re doing a good job, founder! For sure, your idea is going in the right direction, and you’ve chosen a hell of a team that created a product that people want, need, and also pay money for.
Now it’s time to make an angel investor pitch once you are working with some happy customers. You may find free communities, accelerators, incubators, and angel investors on Facebook, LinkedIn, and other networks.

But, it would be beneficial to communicate your ideas for the company’s future effectively. A fantastic pitch deck will give you a place in the front row; it could be a video or PDF that you can make using different online tools. Be creative. Sell your idea and your values. Angel investors often accept between 10% and 20%, although they may want 40% or more. People could put down $10k, $25k, $50k, and occasionally even $100,000.

STRATEGY for STARTUPS with 100 clients, investors on board, the best team, and an excellent product

Kudos, founders, for reaching this point! As growing entrepreneurs, we must keep our egos in check and acknowledge that we still have a long way to go. While securing capital is crucial for startups, seeking out strategic advisors who can offer more than just funding is equally important.

Startups can benefit significantly from the enormous knowledge, contacts, and skills that venture capitalists (VCs) can offer. These experts know the ins and outs of the startup business better than anyone since they have already been in your position.

Where, then, can you locate VCs? Investigating accelerators and incubators, which provide resources and support for early-stage firms, is a fantastic alternative. Online marketplaces like Ventroduce.com can also assist in establishing connections between business owners and investors looking for attractive prospects. It’s important to remember that sincerity and authenticity are essential when pitching to VCs. Don’t try to appear to be someone you’re not or overstate the possibilities of your business. Experienced investors have seen it all and can immediately recognize contradictions or false statements.

STRATEGY for STARTUPS with traction

Guys, you already know the game if you have a SaaS startup with more than $300k ARR. You are already well-connected; you know a lot of angel investors and VCs. Now you need to choose the right partners to scale the company. Those with experience precisely in your industry are the best for you because they already have the infrastructure and the knowledge you need. Don’t forget that running a SaaS company is not a sprint but a marathon. I advise you to do sports, sleep well, eat healthy food, meditate, spend time with smart and good people, and keep learning daily.

My team and I have been through many ups and downs, but the main element that kept us together was the idea of the business and how we could be a game changer for the SaaS industry. And every person, CEO, CTO, CMO, and other letters in their title can bring a slight change around them by helping others that are now in the situations we have been in.