In my career in the investment industry, from venture capital to angel investment, I have seen at least thousands of fundraising cases. For most entrepreneurs, it is usually the first time to raise funds, but for most investors, it is just one of many fundraising cases. With so many cases, investors may not always respond to the reasons for not investing one by one. Therefore, it is common to see entrepreneurial teams spend a lot of time raising funds from unsuitable investors with not-so-good fundraising strategies.

1. Fundraising Timing
First of all, you must understand that only a very small number of entrepreneurs can get non-3F (Family, Friend and Fool.) funds. Therefore, to convince any investor, you must provide a statement of your level of preparation and the value you have created that exceeds that of the team at the same stage. If the product is not yet online, there is no operating data, and you only raise funds with a presentation, the success rate of raising funds in any market is very low. The exceptions are usually serial entrepreneurs, golden teams or those with special resources.

When entrepreneurs think that if they have enough funds, they will not be willing to dilute their shares at this time. This mentality often makes it easier to raise funds. Therefore, what can attract funds is not to use investors' funds to explore business models or increase survival time, but to use investors' funds to accelerate the realization of the blueprint that has been planned in the mind, that is, to use the power of capital to allow the company to enter the next level. Therefore, the time to raise funds is definitely not when the funds are about to run out. Usually, when there is no need to raise funds, it is the best time to raise funds.

2. Fundraising strategy After deciding to raise funds, at least two numbers need to be discussed: how much money to raise, and the other is the company's valuation (or the percentage of investors).

(1) Fundraising amount: The industry generally recommends that startup teams raise enough funds to cover expenses for 18 to 24 months, but I would recommend that you base the fundraising amount on how much money is needed to achieve significant milestones. This means that when planning this fundraising, you should also consider the circumstances you may encounter in the next fundraising. If you raise too little, you will need to raise funds again when there is no significant change in operating conditions, which is not good for the original investors and the subsequent fundraising conditions. However, you should not think of raising all the funds you will need for the next three to four years at once. First, a large amount of equity will be diluted at this stage, and second, the company's value will not have a chance to emerge as it develops. In addition, when there is no short-term funding pressure, the business will be less likely to make positive breakthroughs.

(2) Valuation: When a company enters the growth stage, it usually has financial figures that can be used as a basis for valuation. When a company is still in its early stages, it is usually less likely to use financial figures as a basis, but it is still necessary to come up with a basis for valuation. Regardless of the method used, one thing must be understood: for the entrepreneurial team, the startup is unique, but for investors it must be one of the options.
Therefore, although there will not be completely identical companies, for investors, there are still hundreds of evaluation experiences that can be used as a reference. If the team status, market opportunities and business status do not match the valuation, the chances of finally negotiating an investment are naturally very low. The most common situation is that the company has just started a business, the team, products and technology are all at a certain level, but the market has not been fully verified, and they want to raise 1-2 million US dollars and let investors account for 10%. At this time, you can evaluate other companies when their market value reaches 10~20 million US dollars. What are the stages of those companies? Because it is easy for investors to come up with a lot of investment experiences to draw analogies in their minds. Of course, they will find that many companies that have been ahead in business progress for several years have fundraising valuations that are roughly in this range.
Of course, valuation is not the only condition for investment, but only when the difference between investors and the team in the perception of value is not big, there will be tools such as CB, Safe, and special stocks to shorten the gap between investors and the team in the perception of valuation and risk. Another situation is to allow a specific person to hold a certain share with a very small investment amount, but a large amount of money needs to be raised soon after. For example, a specific person has just been allowed to hold 15% of the shares with 100K US dollars, but the funds are obviously not enough for the team to use. Next month, they hope to raise 1M US dollars to hold 10% of the shares. This will undoubtedly put the statement of value in a dilemma.

3. Fundraising Target
When we are looking for investors, we must first think from the perspective of investors: Why are investors willing to invest in us and the investment team at this stage? What are investors pursuing? What is the appropriate investment amount for this investor? What is the expected return? What is the role in the entire fund case? Only in this way can we avoid spending too much time on unsuitable investors.

(1) Venture capital funds: You must understand the fund’s investment attributes, decision-making process, and average investment amount. If the fund’s minimum investment amount is US$1 million and it hopes to invest no more than 50% of the investment amount for that round, it means that a fundraising amount of more than US$2 million is suitable for the fund. Each fund has a different organizational structure, so the decision-making process is also different. Entrepreneurs can understand this in advance, from the initial interaction and evaluation of colleagues in the entrepreneurial team to the final investment level that can be decided.

(2) Corporate venture capital: Most corporate investment strategies are aimed at investment returns, so you must first understand the synergy between the team's business and the company. You must also understand the company's willingness to invest, whether it is to obtain key monopoly technologies, expand the depth of cooperation, or purely for financial investment. Finally, you must consider whether there will be competitive issues that prevent you from cooperating with other customers. In addition, it is common for investors to end up in a discussion: if you can cooperate without investing, then why invest?

(3) Angel Investment: 3F-Family, Friend and Fool- In addition to family members, most of these investors believe in the qualities of the founder. Based on past workplace interactions, they believe that the founder will succeed and therefore provide support without considering or discussing valuation or rights and obligations.

Strategic partners with funds/resources - Usually this type of investor is not a full-time investor, but because they are upstream and downstream of the fundraising team, or have an understanding of the industry and the trust of the team, they have the opportunity to participate in the investment at the invitation of the team. Therefore, it is recommended that the team try more business partners during the fundraising process, as they all have the opportunity to become the first angel investor.

Individual angel investors - Most angel investors abroad are entrepreneurs with experience in entrepreneurship. Although Taiwan has many successful entrepreneurs in the manufacturing industry, most of them are still working on the front line. Secondly, if the successful experience of the manufacturing industry is used to measure the current new economy startups, some people may feel unreliable. Therefore, it is still difficult to pass on resources and experience.

Angel investment organizations are organizations that bring together a group of people who are willing to invest their money and resources in early-stage investments. Regardless of their past background as entrepreneurs or professional managers, they have all decided to participate in the battlefield of early-stage investments. Taking AVA Angel Investment as an example, the backgrounds of investors include entrepreneurs, industry, professional managers, and people with experience in listing and new venture capital. Therefore, for entrepreneurial teams, it is not only possible to have financial investment, but also the opportunity to provide links to various resources and exchange experiences. Taking some of the investment cases that have been completed so far as an example, investors have a lot of investment and practical experience in OMO and digital transformation issues. Many experiences can be applied and extended across industries. When the strategy and direction are correct, the speed of team progress will increase exponentially.

Summary
Starting a business is not easy, and fundraising is even more difficult. Don't let unreasonable things increase the obstacles to fundraising. Even if the fundraising is successful with an overly high valuation, it means that the investor will also start to accompany you with overly high expectations, and the pressure and relationship along the way will not be very healthy. If you are invested at a too low valuation, you will feel that you are being taken advantage of. Entrepreneurs are all admirable because they usually accomplish something that the investors themselves cannot do. Investors are not really good or bad, only suitable or not. If you can find the right investor, a lot of unexpected value will be created.