Cloud Stocks: What Can Cloud Startups Do To Raise Seed Capital in 2021?

In general, Bootstrap First, Raise Money Later is the best strategy. You need to be ready to raise money.

If you decide to raise money, I strongly suggest you read the 1Mby1M Seed Capital series of interviews on our blog ASAP. We’ve profiled investor after investor to understand their investment thesis. You need to get in their heads and get a sense of what they’re looking for, especially if you’ve never raised money before.

Remember, Investors are looking to multiply the money that they put into startups.

A bit more sophisticated way to think about it is to ask the question: Multiply by how much? 2X? 3X? 5X? 10X? 20X?

This question determines the strategies of what they’re looking to do:

• Look for Unicorns (build companies with billion dollar market caps): Go from 0 to $100M in revenue in 5–7 years.
• Look for early exits (sell capital efficient startups and make a lower multiple, but nonetheless, have a successful outcome). Bootstrapping to an Exit is a strategy that this kind of investors love. There are ways of playing this game that are somewhat different from the regular Unicorn pursuit scenario. However, in Cloud, this is an eminently viable strategy. 

Just like you look for product-market fit, you also need to look for investor-entrepreneur fit. A seed investor looking for a Unicorn won’t invest in a capital-efficient startup that is better suited to a $30M strategic exit. And vice versa.

By the way, this series is also available as videos on YouTube: 1Mby1M Roundtables. Each roundtable typically has an investor guest.

And this series is also available as Podcasts on all major podcast platforms: 1Mby1M Entrepreneurship Podcast on Apple Podcasts

In terms of the micro-level evaluation, they’re trying to answer the following questions: The 1Mby1M Self-Assessment. Before you go up in front of investors, you should be able to answer these questions satisfactorily.

If you want to get specific feedback, please come talk to me at one of our Free Public Roundtables | 1m1m – One Million by One Million.

Photo credit: Powerhouse Museum/Flickr.com

This segment is a part in the series : Cloud Stocks