Scott Brown
Late-stage startups are facing major fundraising headwinds, but early-stage investing is still a bright spot for startups until they hit Series B rounds.
Traditional venture capital dollars are harder to come by these days, but institutional investors are still looking for smart investments, and industry watchers are hungry for the good news a new round of financing suggests. While the market is uncertain, founders need to be ready to use their capital infusions as an asset that extends beyond the cash it represents.
In any market environment, a fundraising event can act as a vote of confidence or validation from investors, supporting your company’s growth via talent acquisition and brand awareness. No matter the size of the round, securing external investment is a key milestone in many companies’ journeys, and it often takes a tremendous amount of effort. However, after putting all that work in, many founders make the mistake of letting a funding moment pass by without extracting all the value they could have.
Over the course of my 20+ years as a marketing leader at startups, venture capital firms and large tech companies, I’ve helped dozens of companies announce funding news, ranging from $1 million pre-seed rounds to $50 million raises.
Here’s my playbook for founders looking to make their “big money” moments go farther:
Rethink assumptions about fundraising news
Founders may overlook the value of announcing funding news for several reasons, but the biggest one is assuming the round isn’t “big enough” to warrant attention. When you see other companies raising hundreds of millions of dollars, it can be easy to think no one will be interested in hearing about your startup’s much smaller round.
Fortunately, that isn’t true. While big numbers may draw splashy headlines, smaller rounds can still drive interest if the announcement is executed well and you can connect the news with some larger industry/technology/societal trend.
Another reason founders hesitate is if all or part of the new capital is through a debt investment. Though it’s becoming more common, especially as VC investors pump the breaks, there is still some stigma around debt funding, and founders may worry they’ll be penalized for adding debt to their balance sheets.
However, securing a debt investment often requires even more rigor than an equity investment, so highlighting a debt raise can actually indicate your business’ fundamentals and revenue numbers are strong enough to support repayment.
Founders may also worry about giving competitors too much information about their business and prefer to make progress while flying under the radar. There are benefits to keeping certain information under wraps, but it’s important not to get so focused on building behind closed doors that you miss the opportunity to get more visibility with the prospects and partners that will drive revenue.
Finally, funding announcements are sometimes just not at the top of a founder’s long to-do list, largely because they are either unsure of how to run an announcement or lack the marketing expertise to execute it effectively. This next section should help on that front.
Three steps to maximize the marketing value of your fundraise
The future is unknown, so when you have a funding round locked up and cash in the bank, you have the opportunity to make the biggest impact you can with the news you have in hand.
To leverage this moment and be successful you need to:
Step 1: Plan ahead
Preparing for a fundraising announcement takes time and strategic thinking. As soon as you’ve reached the point in your investor conversations where term sheets are a likely next step, you should assemble your marketing team to start working on a plan. This includes aligning with your investors early about their ability to participate in a news announcement.
Some key questions your marketing lead should consider include:
- Who can offer public quotes or commentary on the investment?
- What are the key messages you would like to communicate about this round and what messages would you like your investors to amplify?
- When is the investor available to review announcement materials and participate in potential media interviews?
Once you know how much time the investor has to devote to the announcement, founders should work with their team to develop the broader announcement narrative, including how the news provides context for your company’s journey.
The narrative should include:
- The problem your company is solving for customers.
- Your company’s competitive advantage.
- How the new funding will allow your company to grow.
As part of narrative development, the team should also prepare a “Frequently Asked Questions” document tailored to the announcement, providing clear details about the news to help your company respond quickly to any inbound media interest. Don’t forget to arm your front-line employees, like sales and customer success, with these FAQs so they can respond to inquiries or use this exciting news in their daily activities.
Lastly, founders must work with the marketing team on a timeline that helps avoid accidentally “scooping” your own news. This can often happen with Form D filings with the Securities and Exchange Commission. Many startups are required to file a Form D shortly after completing an equity raise, and eagle-eyed reporters often monitor the SEC’s website for these filings. I’ve seen numerous instances of finance or legal teams filing a Form D on their own timeline and inadvertently breaking the funding news early, resulting in far less buzz than hoped for.
To avoid this, ensure your announcement plan takes filing requirements into consideration, and communicate to your employees and investors the importance of keeping a lid on the news before the filing becomes public.
Step 2: Focus on owned and shared channels
Reporters’ inboxes are always crowded with news pitches, so it’s true that your fundraise may not be large enough to get noticed for a major story. That said, regardless of the size of your fundraise, you can always lean into the channels you control.
Your announcement plan should include details about how and when you’ll roll out the news on your company website, blog and social media channels. It should also account for how you can leverage your investors’ owned channels to further extend the reach of the news. Messaging across all channels should be consistent with your broader narrative and tailored for key audiences on each channel.
Don’t overlook the basics, such as providing your sales team with a script for talking about this news with prospects or letting your customers know about the development and what it means for their ongoing relationship with you.
Step 3: Issue a press release
The value of putting a press release on the wire has been debated for years. I believe issuing a straightforward press release gives you a boost beyond updating your owned channels and serves as an important public milestone in your journey. For example, a press release offers SEO benefits, and it can be used as an asset for any sales conversations with prospective customers.
Using either your in-house communications team or an external PR agency will make sure the right information is included in the release. They can also help ensure smooth distribution across newswires, industry newsletters and trade associations.
A few must-haves include:
- Your overall company narrative.
- Details on the investors involved in the fundraise.
- How you plan to use the funds (this is a great place to shape your growth narrative).
- Quote(s) from the CEO or founder.
- Quote(s) from the investor(s).
Once you’ve issued a release, your PR team can use it to pitch the news to local, national and industry media outlets, increasing your chances of securing organic media coverage. The team can also help prepare your leadership team for interviews resulting from media outreach.
When to delay your fundraising news
While things like Form D filings can influence your announcement date, there are some situations where it may make sense to delay the news.
If you have other upcoming news moments such as a new product launch, big customer wins or a major new hire, you can make a bigger splash by bundling those announcements into one release to highlight additional momentum. Bundling news together doesn’t always deliver success, but sometimes another bit of news can be the hook that makes it viable for a news outlet to cover a small or run-of-the-mill fundraising round.
Additionally, if your team has not had enough time to prepare all the assets needed to launch a successful funding news announcement, it’s often better to extend your timeline than to rush out with an incomplete narrative.
It’s also important to consider any other noisy news cycles on the horizon that could draw attention away from your big moment. For example, most PR firms would counsel against publishing your news immediately before or after holidays, around weekends or during earnings season for public companies.
Set yourself up for success
After all the time and energy spent fundraising, founders should never overlook the public announcement step of the process. Companies who skip this step are leaving marketing dollars on the table.
Publicizing funding news allows you to create incremental value beyond the capital investment by highlighting your momentum and driving brand awareness with the stakeholders that matter most. A well-executed announcement can attract the attention of top talent, future investors, current and potential customers, and the media. Getting it right the first time will also help smoothen the process for all future announcements tied to funding or your company’s progress.
By planning ahead and maximizing your amplification channels, founders can get the most bang for their buck when the next big money moment comes around.
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