Attracting capital goes far beyond having an innovative idea. Startups seeking resources need to demonstrate concrete metrics, a well-structured business model, and a clear growth plan to convince increasingly selective investors.
According to Marilucia Silva Pertile, co-founder of Start Growth and startup mentor, preparation for raising investments begins long before the first meeting with an investor. “Venture Capital funds want startups that know where they want to go and how they will use the resources. A well-done pitch only works when there is a solid planning behind it,” she explains.
What makes a startup attractive to investors?
To secure financial investments, startups need to demonstrate traction and growth potential. According to a survey by CB Insights, 35% of startups fail to raise investments, often due to lack of clarity in the business model or execution.
Marilucia highlights some aspects that make a difference when attracting investors:
- Clear market and problem: It is essential to demonstrate a real and relevant problem in the market and how the startup solves this pain better than the competition.
- Sustainable business model: Startups need to prove that their product or service generates predictable revenue and has scalability potential.
- Financial and operational metrics: CAC (Customer Acquisition Cost), LTV (Lifetime Value), MRR (Monthly Recurring Revenue), and churn rate are fundamental indicators to show the company’s performance.
- Prepared and committed team: Investors assess not only the product but also the team behind it. The execution capability is a decisive factor when betting on a startup.
The power of a well-structured pitch
The pitch is the first major opportunity to attract investors’ attention and should be direct and impactful. “A poorly structured pitch can compromise even promising startups,” warns Marilucia.
To increase the chances of success, an effective pitch must contain:
- Value proposition: What the startup does and what problem it solves.
- Market size: Growth opportunity and revenue potential.
- Business model: How the company generates money.
- Competitive advantage: What makes the startup unique.
- Metrics and traction: Achieved results, clients, and projections.
- Team: Who are the founders and why are they the best to execute the business.
- Use of investment: How the money will be applied to generate growth.
Structured financial planning
Lack of financial organization is one of the main reasons why startups lose investments. According to CB Insights data, 38% of startups close due to lack of cash flow control.
To prepare for an investment round, startups should:
- Have a clear projection of revenues and expenses.
- Control the burn rate (cash consumption rate).
- Demonstrate how the investment will be converted into growth.
- Keep organized documentation for due diligence (financial and legal audit done by investors before the investment).
“The investor needs to see that the startup knows how to manage resources and has a clear plan for sustainable growth,” explains Marilucia.
Networking and strategic partnerships
In addition to internal preparation, creating strategic connections is essential for startups seeking investment. Acceleration programs, industry events, and mentorship are valuable opportunities to expand the network and attract investor attention.
“Raising investments starts long before the meeting with a fund. Building a relationship with investors and being present in the ecosystem increases the chances of getting an investment at the right time,” emphasizes Marilucia.
Investors look for prepared startups
The Venture Capital market has become increasingly selective. According to the “Global State of Venture Capital 2023” report, global investments have decreased, making investors more discerning. This means that strategically prepared startups have a much better chance of standing out.
“Having a promising idea is not enough. The market rewards entrepreneurs who can prove their worth and demonstrate that they are ready to grow,” concludes Marilucia.
With the right preparation, startups not only increase their chances of raising investments, but also ensure that the resources received will be applied efficiently to boost business growth and consolidation.
