Global fintech and funding innovation ecosystem

How Much Can I Realistically Raise?

Antler | Alan Poensgen | Jun 1, 2023

Antler Traction by pedigree - How Much Can I Realistically Raise?

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In the volatile landscape of startup funding, two dimensions that significantly influence early-stage fundraising are "Founder Pedigree" and "Traction."

  • The pedigree of a founder becomes crucial when a startup is in its infancy and lacks traction.
    • Investors lean on the founders' past accomplishments to predict their future success, reducing perceived execution risk.
    • This assessment can be subjective, as founders who don't fit the stereotypical successful entrepreneur mold can often be overlooked.
  • Traction can overtake pedigree in importance. When a startup displays more than just an idea, its ability to raise funding can dramatically increase.
    • This enables founders without a "classic" background to succeed, though they may need to prove more initially.
    • "Levelling up cheats" and "Handicaps" can shift a founder's position in this fundraising game. For instance, certain prerequisites like fundraising skills and market attractiveness can make or break a founder's ability to raise funds, irrespective of their pedigree or traction.

See:  Formula for Building Fintech Companies with Resilient Valuations

  • Other learnings:
    • Valuations are typically a function of capital raised, with a 15-25% dilution assumed regardless of the raised amount.
    • Interestingly, a founder's LinkedIn profile may play a more critical role in the earliest stages of fundraising than the pitch deck itself.
    • These are general guidelines and exceptions exist, especially in diverse ecosystems. These insights are mostly applicable to software startups, with different rules for biotech and hardware companies. Startups mimicking successful business models also face unique challenges, with funding tending to be binary based on their timing and team experience.

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