Lighting Up a Second Round of Funding

Most savvy investors look at a beginning round of financing as throwing a roll of dice at the Bellagio in Las Vegas. Of course, the way for investors to overcome those odds is to ensure that the companies they are looking at investing in adhere to a high standard of criteria before investing. For example, does the company have a series of Sustainable Unfair Advantages™, does the investors emotionally excited and passionate, and does the business model have a strong Capital Efficiency Sweep™? These crucial components CAN and WILL assist in building certainty in investors that your aircraft will FLY because they assist in increasing the probability of a future success.

The real challenge for investors begins around the start of the second round. While the first round is generally anywhere from several hundred thousand to five million, this is not the case for the second round. So what does this mean to you? Well, to start it means that there will be a series of criteria that you will be evaluated on which are quite different from the initial criteria during the first round of investment. The great thing is that FundedPlans anticipates these criteria and deals with them effectively in the initial first round planning process so that the second round criteria is far better controlled and easily and effectively managed.

How solid are the financial projections?

With many investors, the initial round does not have the same high standard for the second round financings. Here, investors need to view future projected cash flow, a very detailed balance sheet projection and a solid map of how the company plans to expend its second round proceeds in order to ensure the capital is being used efficiently. FundedPlans addresses such concerns early in the planning process with its Capital Efficiency Sweep™. This enables all FundedPlans clients looking for initial capital to appear to investors to possess the preparation and power only generally expected and afforded to previously funded companies in search of their second round of funding.

What is the status of the senior management?

At the time of the first round, no savvy investor expects the management team to be fully complete or without room for improvement. Yet, there is no question that by the time of the second round, leadership is crucial. This means the team should be well developed and capable of managing the company well through the second round of funding.

Has there been Maximum Traction?

Maximum Traction is a word we at FundedPlans use to describe the level of progress a company has achieved within a fixed period. It can be measured in progress divided by the time it takes to achieve the progress. If you take the sports analogy, investors would like to see you score four touchdowns in the first quarter instead of just one. Investors LOVE traction, they eat it up. In your current scenario assuming you have revenue what has happened with respect to your sales, execution on key partnerships and distribution channels? What have your real results been?

Where are the Gremlins?

This means where are the problems or the challenges that have not yet begun to rear their ugly heads. Investors will handicap your venture based on the apparent gremlins and the probability of future gremlins. A good plan will identify the gremlins and inoculate against them as well as address the future potential ones and inoculate against them all well.

At the end of the day, if the second round is properly planned for upfront at the beginning of the company with a world-class FundedPlans Platinum business plan, then second round funding results will meet or exceed expectations.