How to measure fundraising success for a startup?
Fundraising and startups have become synonymous with each other. For many, funding is vital to make ventures viable and get off the ground. For others, it is an essential step for fully realizing the vision and maximizing the potential to scale and dominate an industry.
Being so pivotal for overall success, it just makes sense that entrepreneurs and startups are tracking and measuring their fundraising success and performance.
So, what should guide you as you measure this data? What metrics are worth tracking? Which can be misleading distractions? What do you do with it?
Why Measure Your Fundraising Success
Tracking and measuring your fundraising success is about knowing how well you are doing. When you have clarity on this, you know where you are doing well or not. You can see what needs attention and improvement.
Without this data, you are flying blind on pure assumption. That isn’t a reliable formula for succeeding at anything, or getting the most out of your investment in it.
In most cases, you might be surprised at what the data reveals you should be doing, versus what you thought would work. That’s the reason why you should learn how to measure fundraising success.
Ways To Measure Fundraising Success
Funding Rounds Closed
How far have you progressed through rounds of funding? It doesn’t just all come at once. You don’t just ‘get funded’ and you are done. The number of rounds of funding startups has been raising before an exit is also considered.
More big startups have been choosing to stay private and grow themselves long before an M&A transaction or going public with an IPO.
It is not uncommon to go beyond a Series C round. You may raise a Pre-Seed, Seed, and Series A through E.
Your progress through these rounds can be a great indicator that your startup is growing, proving itself, and is derisking itself as it expands and attracts more smart money investors. Just don’t get too hung up on plowing through rounds for the sake of it, and ignore the real reasons you should be raising.
It’s not about the money, it’s what it can do for you. Or more importantly, what bringing in additional investors can do for your venture.
Would you like more information about what to do if your investor outreach is not working? Check out this video where I have put down some interesting tips you can use.
Dollar Amount Raised
How much money has your startup raised in total so far? How big have each of your rounds been? Find answers to these questions when figuring out how to measure fundraising success.
This can give you some measure of how you are doing from round to round and on the startup landscape and within your sector. Big raises can make great headlines. Many see this as a badge of credibility. One which can attract customers, talent, partnerships, and other investors.
However, be clear that the dollar amount that you’ve raised doesn’t necessarily directly correlate with other more important success metrics. Unless your only goal with this startup was to raise as much money as possible.
There are plenty of startups that have raised big money and have roped in notable celebrity angels and famous funds and then failed horribly from a business perspective. Look at WeWork. Even billions of dollars couldn’t cover up their flawed business model.
Sometimes, the more you raise, the less you’ll exit with. Or the fewer options you’ll have on a daily basis and for an exit. It can be a constraint if you are not careful.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them