Summary

The goal of this module was to outline the process of raising money from investors to fund the growth of your startup. We made the following points:

Not all startups need to raise external capital. Think through the implications of self-funding, or bootstrapping, versus external funding.
Not all startups can raise capital. Many founders underestimate the rate of growth and scale they'll need to achieve in order to generate an acceptable return to investors.
Investors view startups through the lens of their investment portfolio. They'll only invest in startups that can generate a return that makes up for all the companies in their portfolio that don't succeed.
Most investors don't invest in ideas. They look for traction as evidence that the business is meeting a customer need. The best form of traction is profit, followed by revenue, and then customer engagement.
It's important to understand different types of investors and the non-financial value they bring. A good rule of thumb for choosing investors: Smart, involved money > Dumb, passive money > Dumb, involved money.
Raising a funding round requires strategic decisions about which investors to approach, and in which order. Most successful funding rounds involve pitching several investors in parallel.
To close a funding round, you'll need to be ready for due diligence. You can streamline this process by preparing a data room in advance.

Useful resources

Read the book Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist, a comprehensive guide on how to raise capital by Brad Feld and Jason Mendelson.