Andrea Turner Moffitt '07BUS and Dara Kagan
Andrea is the Co-founder at Plum Alley Investments; and Dara is the former Associate Director of Membership Engagement
The Five Best Practices for Early-stage Fundraising
- Be clear on the right sources of funding
Do your diligence. Know which investors have experience and stated commitments that align with your mission. Take time to understand the landscape for capital raising from grants to debt to equity, and funder expectations on milestones. Looking at competition in the space to see who is funding similar work will help you target funders and differentiate your own organization. Most crucially, funding comes down to relationships. The more senior the relationship you can build within a grantmaking or capital-giving organization, the likelier you are to receive funding.
- Demonstrate clear traction
Knowing what milestones investors will expect at certain points will help you plan your business and operational strategy, in addition to your funding timeline. Incubators, accelerators, awards and recognition, or competitions can be crucial launching pads, as can creating a minimum viable product (MVP) and demonstrating product-market fit.
- Know your business model and social mission
Funding rounds can and should be tied to the growth of the company. When thinking about investors, it is critical to think about the financial capital you need and the support and partnerships that funders can provide at various stages. The financial and legal structure of your organization will also determine the kinds of investors you are going to attract and seek out. Structures ranging from B-corporations and LLCs to nonprofits and L3Cs should be determined at the very beginning of an organization’s life to avoid a costly legal shift later.
- Articulate uses of proceeds
Come prepared to explain how you plan to allocate funding to accomplish your goals, both social and financial. Demonstrate a clear plan for the top categories of spending and how that will translate into achieving specific goals. Identify key performance indicators (KPIs) for the organization. It can be valuable to identify KPIs and engage funders to offer input and co-design KPIs that will enable more transparency and ensure alignment of goals.
- Minimize risks for your investors
Most funder/organization relationships are multi-year partnerships. Strong relationships are based on shared vision, aligned expectations, and a commitment to transparency. Take steps to ensure expectations are clear up front in terms of pace of growth, impact targets, and remaining technical or business risks.
Plum Alley Investments is a membership designed for individuals and institutions looking to invest in a new way for financial and personal returns in private companies. They fund women entrepreneurs at the Series A-level.