Let’s start by looking at the first question: “what are the milestones needed for a successful fundraise?”. I think most entrepreneurs understand that valuation does not simply increase because you have been working hard for many months since your last fund raise. As many have found out, it can easily decrease if you haven’t made the progress that your investors were hoping for. One goal of this article is to help entrepreneurs understand the specific milestones they need to achieve for a successful fund raise at a higher valuation. (BTW – even if you are cash flow positive and don’t need to raise capital, these milestones are still the right milestones to use to run your business in an optimal way.)
As the business moves through these stages from left to right, risk is removed, and the venture becomes more and more attractive to investors, and will receive a higher valuation.
I believe the easiest way to understand these milestones is to look at a startup as having three key phases. Even though many investors won’t use these same words, these are the milestones that they are using as their way of judging how far a startup is along the journey from highly risky concept phase, to a largely de-risked, growth stage.