Raising capital in practice

Finally: the process itself. Raising capital is a project in its own right — it takes time, energy and preparation. In this last lesson we put everything above together into a practical walkthrough of how a fundraise actually works, from the first pitch to a signed agreement.

Pitch and data room

The investor journey almost always begins with a pitch. In practice you need several versions: a short spoken introduction, a pitch deck of a dozen or so slides, and the ability to answer follow-up questions. A good deck tells a clear story: the problem, the solution, the market, the team, the evidence so far, and what you will use the capital for.

If an investor becomes interested, you move on to a data room — a structured collection of the documents they need to assess the company: company information, agreements, numbers, cap table and plans. Having this ready in advance signals professionalism and makes the process faster. A messy data room sows doubt even if the company is good.

A credible financial model

Investors expect a financial model — usually a projection of revenue and costs a couple of years ahead. The point is not that the numbers will be right (they never are), but that they should be thought through. A good model shows that you understand the drivers of your own business: what creates revenue, what costs money, and how they connect.

Be honest and build the assumptions from the bottom up. A model showing explosive, unfounded growth weakens credibility more than it impresses. An experienced investor immediately tells the difference between wishful thinking and a model where every assumption can be defended. Tie the model to the milestones from the first module: what the capital will buy, and what results it should produce.

Due diligence

If the investor says yes in principle, due diligence begins — a thorough review where they check that what you have told them holds up. Typically they look at:

• Legal: ownership, agreements, intellectual property and any disputes.
• Finance: accounts, debt, cash flow and whether the numbers add up.
• Technology and product: that it actually works as described.
• Team and market: references, customer contacts and that the market is as you say.

The best preparation is to have put your own house in order beforehand — tidy agreements, accounts and cap table. Surprises in due diligence are what most often overturn deals at the last minute.

Negotiating and choosing the right investor

If you reach a term sheet, the negotiation begins. Remember from earlier lessons that it is not only about the valuation, but about the terms around it — preferences, board seats, option pool and shareholders' agreement. Always get legal assistance before you sign anything binding.

And remember: you are choosing the investor too, not just the other way around. An investor becomes a co-owner of your company for many years. Talk to other founders they have backed, check whether they add more than money, and consider whether you trust each other when things get hard — because they will. A slightly lower valuation from an investor who makes the company better is often a better deal than a high valuation from the wrong partner.

A complete example

A founder in Trondheim prepares her round for three weeks before she contacts investors: she sharpens the pitch deck, tidies the data room, and builds a model tied to clear milestones. When due diligence comes, everything is in place, and the process goes quickly. She gets two term sheets and chooses the one with a slightly lower valuation — because that investor has built companies in the same industry before. The preparation gave her the ability to choose.

Do this now

Draft a pitch deck of no more than ten slides covering problem, solution, market, team, evidence, business model, milestones and capital need. At the same time, set up a simple folder as a data room, and write a list of the documents you are missing. Then you have both the story and the tidiness in place — the two things that decide a fundraise. If you need legal help with agreements and the share issue, involve a lawyer early.