Momentum. The most important component of any fundraising round. But what on earth is it? And how do you get it?
The laws of motion tell us that momentum is the mass and velocity of an object.
In the context of a startup, momentum is a critical factor that can make or break your fundraising. It's about creating a sense of urgency and excitement around your startup, driving investors to get on board before they miss out. So let's break down the two key elements of momentum, mass and velocity, and look at how you can build them up.
Mass: the substance of your startup
To increase your startup's mass, focus on building a solid foundation that will attract investors and other stakeholders. Here are some ways to add mass:
- Systems and processes: develop efficient, scalable systems that let your startup grow and adapt to new challenges.
- Team: assemble a talented, diverse and committed team that shares your vision and can execute it effectively.
- Revenue: generate a steady and growing stream of revenue that shows your startup can monetise its products or services.
- Partnerships: forge strategic partnerships with industry players that can accelerate your growth and open new opportunities.
- IP and technology: create or acquire unique intellectual property and cutting-edge technology that sets you apart from the competition.
Velocity: the speed and direction of your progress
To increase your startup's velocity, make sure you're moving quickly and in the right direction. Consider these factors to gauge and improve it:
- Market size: target a large and growing market that offers ample room for expansion and success.
- Investor traction: attract interest from investors by showcasing your startup's potential and showing you can deliver on promises.
- Growth rate: achieve impressive growth in key performance indicators (KPIs) such as user acquisition, revenue and market share.
- North Star metrics: identify and track the key metrics that drive your business forward, and make sure they are consistently improving.
- Defensibility: develop a competitive advantage that makes it difficult for rivals to enter your market or replicate your success.
- Economic factors: stay informed about market trends and economic factors that could affect your growth, and adapt accordingly.
Putting mass and velocity together
To build momentum, consistently focus on increasing your startup's mass and velocity. That creates the urgency and excitement that draw investors in and make your fundraising far more successful. Remember, momentum matters not only for fundraising but for your startup's overall growth and long-term success.
Back in 2017 I did this perfectly for my automotive business, and it helped land the VC cash.