Why Scaling Businesses Need to Stop Thinking About Fundraising as a Tick Box Exercise

Article co-authored by Invigorate & Invigorate Advisor, Rich Kershaw.

If you’re a scaling business starting to think about your Series B raise, then you need to stop thinking about fundraising as a tick box exercise.



Because if you’re still thinking in terms of fundraising checklists and financial tick box exercises, then you’re not building to scale and you can kiss goodbye to any notion of growth or further investment! 

Before we get into the nitty-gritty though, let’s clarify why fundraising checklists have been so important in your scaleup journey so far…


Fundraising Checklists & the Fundraising Process

Every business has financial goals they want to achieve. For startups and scaleups alike, these goals are nearly always ambitious and need to happen fast! Fundraising is therefore important to startups and scaleups because of the rich potential it has to contribute to business growth.

For investors, investing in startup and scaling businesses is also an attractive option: relatively quick returns, the opportunity to invest in high-impact businesses, the potential to support the next tech unicorn… the list goes on!

However, when it comes to investing in startups and scaleups, this fundraising process doesn’t come about lightly. It’s a process fraught with ‘due diligence’, financial checklists, legal documentation, and much, much more. And it includes a long, hard look into the numbers, team and business model – past, present and future. 

On the face of it, it sounds like an awful lot of ‘paperwork and process stuff’, and you’d be forgiven for thinking that it falls to your legal or financial team, be they in-house or outsourced.

But here’s the wake-up call – it’s not just ‘paperwork and process stuff’ and it doesn’t fall to your legal or financial team. You may have scraped through using this approach for your Seed or Series A investment, but for Series B and beyond, it’s a whole new kettle of fish. 


Fewer Ad Hoc Checklists Please!

In fact, the fundraising process at scaleup stage and beyond is best thought of as ‘continuous due diligence’

Not only does it define how you intend to grow and scale, with past analysis and future projections, but it also takes into account your operating model, your go-to-market strategy, your tech stack and your organisational set-up. Along with an increased expectation of measurement, metrics and data points to back all of this up. 

Well in advance of even considering a Series B fundraise, you’ll need to be acting on these things. This fundamentally requires a mindset shift that transforms an ad hoc process into a way of thinking about every part of your business. It’s a mindset that takes you from scrappy startup to viable, growing business, with all the processes, governance and infrastructure that requires too. 

If it sounds like hard work, then it is! But then you wouldn’t be taking this path if you didn’t like a bit of hard work now and again, right?

At its core, the fundraising process is one that involves examining everything your company has built so far in terms of key financials, decisions, processes, intellectual property and planning.

Seed and Series A stages are largely focused on getting you up and running and achieving product/market fit, and it’s generally understood that plans will change as you develop your product and your team.

Most Series B fundraising is different.

By this point, you should have already worked through launch challenges and basic product development, and have a clearer picture of your future plans – you’re raising money to grow just as much as to innovate. Investors will therefore want to see a leadership team who know their operations are under control and are now thinking about how every decision affects their big-picture trajectory.

If you’ve made it this far in your scaleup journey, you’ll hopefully have considered how to grow and scale beyond your existing, (probably) direct route to market. You now need to turn that direction into a formal strategy.

And here’s a little secret – you can jump-start the process before you’ve so much as made contact with potential investors by asking two simple questions:

1) what’s your growth target?

2) who’s your audience?


Shifting from growth strategy to growth target

Defining your growth target is fairly straightforward: if your growth strategy dictates how you’re going to grow, your growth target dictates why. 

It’s entirely normal to found your company with a clear picture of “success”, but end up so caught up in the day-to-day that you lose sight of why you’re doing it.

It could be a high concept, like a MedTech startup aiming to improve clinical outcomes. It could be as straightforward as exiting for a specific cash valuation, or selling to the market leader for stock, and thus furthering the careers and finances of the founding team. But unless you’ve thought about why you’re doing what you’re doing, it’s impossible to know how your strategy will stand up under the scrutiny of investors.

The good news is though that once you’ve defined your growth target, growth strategy becomes easier. If you’ve got a good team on board (and on the Board!), then work backwards to develop an action plan to reach that target with the right combination of market research, relationships, product and business development.


Your audience is not your customer!

The second question should be much easier to answer with a target in mind: who’s your audience?

But beware! At Series B, your audience aren’t necessarily your clients!

It will largely depend on your market, but here are a few examples that are often true for SaaS businesses and how different targets impact on their tech stacks too:

  • If your target is organic growth and a private equity buyout, you’ll have your eye on raw valuation. Your audience is likely to be your paying customers to build sticky relationships and cashflow, focusing on your bottom line. In terms of impact on your technology stack, this means a bias towards self-service account management and a focus on platform performance to maintain service levels at scale.
  • If your target is acquisition by an industry competitor, your audience might be the industry press, analysts and consultants. They’ll be setting the agenda for purchasing, they’ll influence client procurement and be your main source of product feedback. Focusing on boosting your reputation for competitive innovation can set your business up for an innovation acquisition by the market’s big players. Your technology strategy will likely lean towards maintaining flexibility to innovate faster than your competition – more investment might be needed in decoupling your systems so you can maintain reliability while also rapidly building new features, but it’ll be worth the effort to deliver an industry-leading product.
  • If your target is acquisition by a major client, your audience will be those of your clients who’d be likely to bring a successful solution in-house, so you’ll focus on delivering maximum value to a specific client or clients. Your technology strategy will need to accommodate a more “consulting practice” approach to operations, where a significant chunk of your engineering time is spent tailoring the roadmap to target a smaller number of clients’ pain points with the aim of becoming a critical part of their IT estate.


In each case, your growth route will be very different, and so will your product roadmap and technology architecture. Some of the options you may have already considered are:

  • The Enterprise route – especially if you’re in the B2B space, then you may have considered tackling the big guns and bagging an Enterprise client or two. This is a double-edged sword: it’s a great way to get to revenue positivity quickly and cement reputation via some beefy case studies, but you do run the risk of a particularly demanding Enterprise client monopolising your engineering roadmap and heading towards stagnation. It’s not always a bad thing – if your target is client acquisition, provided it makes financial sense for them to do so, this could make you an attractive vendor to bring in-house, although it could also equate to putting all your eggs in one basket.
  • The Partner route – using partners to reach more end customers and devising partner programmes and the associated pricing structures. It won’t have much impact on your technology strategy, and (aside from financial considerations) it’s pretty close to outsourcing your sales team. Bear in mind that you’ll have to put the work in to maintaining a solid relationship with your Value Added Resellers if you want to get the same value out of them as an internal team. For example, if your roadmap is highly reliant on market feedback, make sure your agreements with partners include explicit check-ins and reviews to gather client requirements and FAQs, otherwise it’s easy to be taken by surprise and drop down in your partners’ priorities.
  • Global expansion – expanding out to international markets, for example, the Americas or Asia. This is actually a roll-up of a few options, including overseas partnerships, joint-ventures and opening your own offshore sales offices, and each come with pros and cons. Localisation (e.g. multiple currency support and translation of content) is often an added workload that comes with globalisation, as is local support, and moving into a new territory generally means you’re effectively cloning a portion of head-office functions into another region. Maintaining culture, quality of service and communication are all things you’ll need to consider, even if you’re only partnering with another company. But the upside is that penetration into the global market, if you can crack it, can bring your existing product to a new set of clients without as much of a long-term drain on your engineering team.


If you’ve tackled any of these routes so far then you’ll know that they can also be entirely different beasts to the direct, local route in terms of contracts and the sales process. You’ll come up against all sorts of new legal requirements, procurement processes and incentive structures, some of which take a huge amount of time and resource to plan. And then many more months to start seeing a return on!


How does strategy turn into ‘continuous due diligence’? 

The good news is that if you’ve started along one of these routes, then you’ll have already begun your ‘continuous due diligence’ process by default, because the planning, documentation and mindset change that these all require are exactly what will be needed for your Series B+ raise.

Now that you’ve also set out your growth target, you can re-examine all your key decisions to see if you can eloquently justify them as essential to moving towards that target.

Here are a few examples of how this continuous mindset works out in terms of both growth strategy and tech impact: 

  • A specialist B2B SaaS startup decided to have an ultra-focused growth strategy. Seeing that their market was antiquated, success for this team depended on radically raising their clients’ expectations of both services and features. Their audience was thus their paying customers, and so they needed to focus on product development and team culture. In terms of how this influenced their technology planning, they anticipated a need to maximise “bang for buck” as they grew organically with a small team. They relied heavily on self-service customer service bot / knowledge base tools like Intercom. They also leaned on serverless computing to power their back-end systems and avoid complex infrastructures, knowing that their team would be small for some time. It meant that they could avoid the overhead of more complicated development practises and focus their energies on competitive features and client support.
  • A MedTech company identified their growth target as acquisition by an industry leader and their strategy was thus product innovation. However, they’d become niche leaders on the strength of modernising common processes rather than pushing the state of the art. This approach had taken them through Series A, but was a problematic blocker to having a clear post-Series B growth plan. Identifying this blocker as part of the ongoing business strategy mindset gave them the direction they needed to focus on negotiating data retention contracts with their customers. This opened up the development of new AI and machine learning features and became their roadmap focus and path to exit. In terms of infrastructure, they pivoted to a more microservice-led architecture, as it decoupled mission-critical functions from cutting-edge but riskier new features. With this approach, they were able to scale crucial operational infrastructure as their post-investment sales drive bore fruit, and work on AI and machine learning features in the background without worrying about its impact on service levels.


So you see, the fundraising process, all those checklists… they aren’t about scrambling to get all your ducks in a row at a specific time when you’re fundraising, it’s actually part of your company’s DNA as you scale, grow and expand.

By changing your mindset and shifting from a growth strategy to a growth target, you can become much more focused on where you want to get to and how to get there. And by being super clear on your audience for the next stage in your journey, you can start to build out a strategy (and the associated tech stack!) that will stand up to the most rigorous of fundraising processes. Just remember, it’s a continuous process, not a mad two-week scramble before that first investor meeting!

You can find out more about our co-author on this article, Rich Kershaw, here.

Invigorate members can contact Rich directly here.

Non Invigorate members can apply here.


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