by Alexandra Fraser
So, you want to raise funding for your business in 2022? Before you get there, the first question an angel or any investor will ask you is: what’s your plan?
My experience as an angel investor has shown me how a solid plan is often informed by a solid business strategy, and this is what I’d like to outline in this article; strategy for startups is critical, especially if your goal is to raise sustainable funding for your business.
Miriam Webster defines strategy as “the skill of making or carrying out plans to achieve a goal”. Strategy, then, is not just a plan, but a process. However, strategy is often seen as an outdated process or one that is only relevant for large companies – where a three-day break away informs the business’s targets and objectives for the next year or three by the executive team or board of directors.
The reality is that every business, whether you are a sole trader or startup, should have a strategic process in place, even though it might seem like a daunting task.
An effective strategy reveals what your business goals are.
A simple place to start is to ask yourself what success for your business can look like in 2022. You can also ask yourself what your top five business goals are for the year. Once you have set your goals, you can use them as a north star and work backwards to establish what you need to do to get to the goal, as well as what resources you need to achieve them.
For instance, if you want to raise funding this year, start by researching all of the potential funding sources available to you, what their investment requirements are, whether you meet these and what business stage you need to be at for each investing stage, before preparing funding applications or asking investors for meetings.
An effective strategy displays your ability to use limited resources to achieve a goal.
When I look at a potential investment opportunity, I ask myself what a business has achieved to date with their own money. Has the team proven the core building blocks or premise of the business? Does the team have a clear product roadmap that speaks to the needs of the customers they’ve identified? All of these can be unearthed through a well thought out strategy, or plan of action for a particular period or point in time.
An effective strategy proves traction.
Another thing investors often look out for is traction. Traction is simply the proof of your ability to execute against a plan and to adapt your plan in the face of change. For example, the feasibility of your customer validation plan can be demonstrated by you securing and running a successful pilot.
The benefit of having a strategic process in your startup is that it creates alignment within the team and sets clear goals and priorities for the organisation. It provides a common sense of purpose and plan that is measurable and actionable. The ability to track your progress against long term goals is critical to keep you and your team motivated, as well as keeping your shareholders informed.
An effective strategy is one that is reviewed regularly and tweaked accordingly.
Your strategy doesn’t have to be complicated. It just needs to be consistent. Strategy is not something you put together once a year and then put on the shelf. You need to review your strategy at least once every three months.
A regular review process allows you to track your progress, consider new opportunities, change your tactics (if they’re not working), and continuously evaluate the business environment. The insights you get through reviewing your strategy regularly also provides great updates to any of your current and potential investors. As an angel investor, I find such updates to be a great way to keep up to date with my portfolio companies and to also see where I could possibly assist with introductions or opportunities for the businesses I invest in.
Peter Drucker famously said, “you can’t manage what you don’t measure”. If you’re serious about your business in 2022, spend some time mapping out what success looks like for you and break your goals into quarterly, measurable targets.
Lastly, block out time each quarter to hold yourself and your team accountable. We do this religiously at Viridian where we involve the whole team, and all that’s required is a total of 12 hours in a year. But those 12 hours are some of the most important vital for our business, our culture and our success.
For some great strategy tools and templates visit https://scalingup.com/. At Viridian, we use Verne Harnish’s templates to run our annual and quarterly strategy process and we use the same templates within our programmes when we teach strategy.
About Alexandra (Alex) Fraser
Alex is a well-known early-stage investment strategist and co-founder of Dazzle Angels; her astute sensibility and strong business acumen have her leading Viridian and heading up business operations and development.