Tackling the Funding Growth Trap

Typically, a scale up has got funding for it’s first level of growth. This might have been from friends, or close investors. It might have been a level of seed funding. Now it is time to fund the next level of growth, either by:

  • Generating revenue from the product more significantly (moving from a free preview), and/or
  • Prepareing for the next round of funding.

Whatever route is desired, a clear product roadmap and technology roadmap are required. Getting outside help for this can accelerate the development of these plans, minimise pitfalls, and increase the credibility of the plans. A good business story backed up by strong Product and Technology stories, can be worth thousands, if not millions to the funding request, and the valuation of the business.

Symptoms / Pain Points

  • I’ve tapped my friends, how do I go to the next round.
  • How can I now bootstrap – get money from the stuff I’ve built so far
  • I’m worried that I’m burning cash without the revenue that needs
  • I’m running out of cash!
  • Growth is stalling,
  • I’m not getting the profit I expect from the sales – lots of rework, inefficiencies and unhappy customers.

What If I don’t deal with this growth trap?

  • Your product won’t give you the cash you need
  • It will take far longer than planned to get investors (if the pitch is not clear, trusted, and scalable)
  • You risk missing your revenue milestones as the product and technology don’t deliver on time
  • You will get a low valuation from investors
  • Struggling to find the time to continuously raise funds while trying to run the business.
  • You might get straight-jacketed or need re-work because the underlying technology hasn’t been designed to grow with you.

What can I do?

  • Take Stock – work out where you are now with your product, technology, revenue plans and goals.
  • Get Set – Based on the maturity of the business, set out the stepping stones to get the growth you need, and clear decision points for each stage of investment. The product and technology component is only one part of an investor pack – so you will also need to look at the sourcing of investors, the financial model, and the business vision and purpose.
  • Know your investor – Each investor has a different attitude to risk, requirements to part with cash, and desires for return. As you look at the product and technology determine what is important for each investor type to know, and the level of detail they care about.
  • Create the Story – Numbers, graphs, and diagrams are important, but what stirs investors first is a clear story of what’s going to happen, and why you.
  • Align Product & Technology with the whole story – bring the product and technology story, and resources into the wider investment deck and conversations.
  • The business lead then drives the investment conversations.

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