Are you ready to raise? A quick reality check

You have a product, customer base, and ambitious plans - now you just need the capital to make it happen.

But there’s a difference between wanting to raise investment and being in a position where your efforts here will pay off.

That doesn’t mean that there’s a single checklist every founder needs to tick before approaching investors. Every business is different, and what makes sense for a pre-seed company may look very different for a business raising its Series A.

However, there are a few recurring areas that tend to create friction when a fundraising process begins.

Seven signs you’re not ready just yet

Before you start pitching, it’s worth checking that you’ve covered the basics. What feels minor now can become much more complicated once investors start asking questions.

1. You know you need investment, but you're not clear on what it's for

Needing more runway is understandable, but that’s not a clear-cut investment case. Investors will usually want to understand what the additional capital would allow the business to do, that it wouldn’t otherwise.

Are you hiring a sales team, entering a new market, developing a new product, or increasing operational output?

The more clearly you can connect the investment to the next stage of the business, the easier it becomes to explain why you’re raising and what you expect to achieve with it.

You’ll just need to identify where you are now, where you want to get to, and how the capital will help you.

What to look at:

Map the proposed raise against the next 12-24 months:

• What are the biggest things you want to achieve?
• Which of those require external capital?
• What would you prioritise if you manage to raise less than planned?
• If you raise more than expected, what changes?

Having answers to these questions before your raise is a good sign of financial planning, and will help strengthen your case with investors.

2. Your cap table doesn’t tell a sufficient story

A cap table might just seem like another administrative document or spreadsheet. In reality, it represents something much more important - who owns what, and how that ownership might change in future.

This is particularly important when preparing for investment. It’s easy to start your fundraising journey with a historic cap table that hasn’t been properly revisited in some time.

There may have been some early shares that were issued informally, or perhaps someone has left the business since the cap table was updated.

It may be that there are options sitting outside of the main documented share structure, or the percentages all look straightforward until you model what happens after the new investment.

All of these situations aren’t rare, but they also shouldn’t be overlooked. Having a clear understanding of exactly who owns what, and understanding the impact of future investment is key for many investors.

What to look at:

Before approaching investors, make sure you can answer:

• Who currently owns shares?
• What share classes exist?
• Are there any options in the business?
• Have previous investments been properly reflected?
• What does ownership look like after the proposed raise?
• Is there an employee option pool?
• How is founder ownership and business growth protected?

Running different funding scenarios through your cap table can be a useful way of understanding the implications before you start negotiations.

That’s another reason having a live, up-to-date cap table can be valuable, and remove some of the administrative burden, as your company grows.

3. You haven’t thought about who needs to be on the team for the next stage

Beyond looking at ownership, knowing who is needed to execute your growth plans is key. Investors aren’t just putting money into what the company is today. They’re also investing in the company’s ability to become what you’re pitching.

That means the team matters - this goes beyond the current makeup of your business, and investors know that sometimes the point of the raise is to build the team you need next.

The question is whether you’ve thought about the gap between the team you have now and the business you’re trying to build, and considered how to close that gap to fulfil growth plans.

For example, a founder-led business might have a strong product and technical expertise, but limited commercial experience, or you’ve built a strong sales operation but don’t have the operational capacity needed to scale.

Neither situation is wrong - the important thing is understanding where the gaps are and whether your fundraising plans account for them.

What to look at:

Map your current team against the next stage of the business. Ask yourself: ‘If we achieve what we want to achieve, what capabilities will we need that we don’t have today?’

Then consider if those come from:

• Full-time staff
• Advisors
• Existing team members upskilling
• External partners or subcontractors

As an extension of this, you can go on to discuss your hiring and retention strategy to further demonstrate how you are planning your growth, including offering an employee share or option scheme.

4. Your story changes depending on who you’re talking to

Your pitch doesn’t need to be identical every time, but there should be a recognisable thread running through it.

If your website says one thing, your pitch deck says another, and fundraising conversations focus on something different altogether, investors may struggle to understand what the business is trying to become.

This isn’t necessarily an issue with branding, but it can be a sign that the business is still working out where it sits within the market it’s entered, and what it’s trying to achieve.

For early-stage companies, this is a completely normal position, but one that’s important to keep revisiting as your business plan develops - your proposition may change considerably since inception as you deal with the practicalities of scaling within a specific market.

The current story should unanimously reflect where the business is heading.

What to look at:

Try to explain your business without using your pitch deck. Once it becomes fluent to you, it will be easy to spot any inconsistencies.

Can you explain:

• What problem are you solving?
• Who does the problem affect?
• Why does it matter?
• Why is your approach different?
• What evidence do you have that the market wants what you’re offering?
• How big could the opportunity become?
• Why is now the right time?

Then, look at whether your evidence supports the story. You don’t need every answer to be definitive, but they should be consistent and support the same vision before taking it to a wider pool of investors.

5. Your numbers are there, but the story behind them isn't clear

This isn’t about having a perfect financial model; it’s about being able to connect the numbers to the story you’re telling.

If you’re claiming that you’re going to hire five new people, enter a new market, and double the revenue, investors will want to see them connect.

What will the money be spent on? What assumptions have you made behind your growth? What happens to your runway? What are the major costs? Which numbers are actual, and which are forecasts?

You don’t need to know exactly what your business will look like in three years. But you should have a reasonable understanding of the assumptions you’re making, and have them rooted in figures with solid foundations.

This goes beyond understanding the purpose of the raise, and investigates the financial logic beneath your plan.

What to look at:

Take the proposed raise, and work backwards. If you raise £500k, what are the major uses of that capital, and what’s the financial reasoning behind them?

Ask yourself: ‘What are the assumptions we are making to get from this investment to the outcome we’re projecting?’

This can reveal some truths that will help you to prepare for investor scrutiny.

Perhaps your hiring plan is more expensive than you expected. Maybe your revenue target is reliant on a sales structure that remains untested. Maybe your runway is shorter or longer than you initially thought.

Sometimes the most useful outcome of this exercise is discovering that your original funding plan needs adjusting - and this is always best to understand prior to approaching investors.

6. The admin and documentation are going to become a distraction

Fundraising involves more than finding investors, agreeing a valuation, and receiving capital.

There’s a lot that sits underneath the transaction: company information, shareholder details, investment documents, due diligence, SEIS/EIS considerations, signatures, and more.

If those pieces have been accumulating in different spreadsheets, inboxes, and folders, a fundraising process can quickly expose the gaps.

This doesn’t mean you aren’t ready to raise, but it could signal that you need to take a look at housekeeping before you approach investors - after all, it's easier to do ahead of time than midway through a raise.

What to look at:

Before circulating your deck, take a note of your infrastructure.

For example:

• Is your cap table up-to-date?
• Are your shareholder records accurate and accessible?
• Are share issuances properly recorded?
• Do you know which investment documents you’ll need?
• Is your company information organised?
• If you’re seeking SEIS/EIS, have you applied for advance assurance?
• Do you have a secure data room to share due diligence information?

Having streamlined documentation processes in place can make a surprisingly big difference, and is increasingly important as you scale and things get more complex.

This should make your underlying structure easier to manage as more people become involved.

7. The foundations of the business haven’t caught up with its growth

This is an important distinction between being prepared for the fundraising process, and being prepared for the scrutiny that comes with it.

The previous section is focussed on the practical infrastructure around a raise. This deepens that by ensuring the underlying business itself is secured: your structure, agreements, and assets are in place to support your next stage.

This can include intellectual property, customer and supplier contracts, employment arrangements, company records, licenses, and other obligations that have developed alongside the business.

This is exactly where due diligence comes in. The exact areas investors look at will vary depending on the company, sector and stage, but the general principle is fairly consistent: does the underlying business support the story you're telling?

For example, if you describe your technology as a key component of the business, is it clear who owns the relevant IP? If you’ve highlighted major customer relationships, do you have clear contracts or letters of intent?

These are the kinds of questions that can surface during a fundraising process, and discovering gaps early can give you more time to address them.

Consider:

• Is your company information accurate and up to date?
• Are your shareholder records consistent with your current structure?
• Are important customer, supplier, and employment agreements
• Are your Articles of Association (AoA) and other company documents reflective of how the business operates?
• Are there any outstanding obligations, permissions, or regulatory requirements relevant to your business?

You don't need to assume that an investor will ask about every one of these areas. The point is to understand where your own gaps might be before they become questions during a raise.

Are you ready to raise?

There isn’t a magic moment when a company is ‘ready’ for investment, and having one or two challenges doesn’t exclude you from beginning your investment journey.

You should, however, take a look at where the uncertainty is, and build a plan to combat this as much as possible ahead of time.

But knowing which answers you're confident about and which ones still need work, can make the fundraising process considerably easier to navigate.

At Vestd, we have all the tools and support you need to prepare for investors on one digital platform.

SEIS/EIS advance assurance, investment document templates, a secure data room, digital cap table, and Companies House integration all help to streamline your growth journey.

If you’re preparing for investment, book in a call with our team to discuss your growth plans and next steps.