How Finmark’s Puts Entrepreneurs In Control Of Their Fundraising
In our recent blog, we talked about the concept of defaulting dead or alive. As a startup, you want your company to default alive because that means your revenues are covering your expenses and you’re on a path toward profitability. So, if defaulting alive is the goal, the real question is how much money do I need to raise to default alive? This question is answered through fundraising. Fundraising allows your company to grow and expand. Once you raise enough money from fundraising to jump-start you to grow revenues, you will be able to default alive and begin limiting your fundraising needs or using it as an accelerant to scale faster. Either way, you will be in control of your options.
Companies fundraise for various reasons. Some companies may need to fundraise to have time to develop their technology or product. Other companies use fundraising as an accelerator while still others use it to buy more time to find the right product/market fit. One of the most important pieces of advice when it comes to raising funds is that you should be fundraising from a position of power and not need. When you are fundraising from a position of power, you have control over your company. You do not want to lose this control to people who don’t understand your company like you do.
One way you can maintain this power is by having a better understanding of when and how much you need to fundraise. Finmark provides visibility to your fundraising and financial plans which allows you to know what path you are on.
That path, however, can always change. And with startups, it can change quickly.
All companies, especially startups, are products of the environment. No matter how hard we try, there are things we simply don’t have control over (like a global pandemic, for example!). Any type of planning is good, but everyone knows that most of the time, nothing goes to plan. This unfortunate reality makes it crucial for startups to focus on scenario planning. Creating a Plan A and B, and maybe even a C, of potential outcomes diminishes the fear factor when something goes wrong. Finmark also allows you to do multiple scenario planning.
Let’s look at scenario planning in terms of fundraising. With Finmark you could create several plans based on different amounts of fundraising. This will help show the impact that money will have on your runway and your path toward profitability. It is always good to plan for the best-case scenario, the worst-case scenario, and the in-between scenario, which is oftentimes the most likely to happen.
Scenario planning can also lead to a positive impact on your relationship with your investors. When pitching to investors, your plan should be highly optimistic: “If things work out, here is what we will have in the bank…”. If your investors are confident in your plans and trust that you have a plan for whatever circumstances come your way, you will have more flexibility as a CEO. Your investors won’t micromanage you. You will be able to run the company in the way you set out to do.
The ebbs and flows for startups are extreme and they are rapid. Things don’t just change daily, they change hourly. It is nearly impossible to keep track of all those changes on a spreadsheet. Finmark gives you clear visibility so you can understand the state of your business at any given moment. With Finmark you can create multiple financial scenarios so you’re prepared for whatever life has to throw at you.
This content is presented “as is,” and is not intended to provide tax, legal or financial advice. Please consult your advisor with any questions.