Scaling your business could mean the difference between soaring success and fading into oblivion, so how do you navigate the complex and changing labyrinth of global venture capital, fundraising, and business finance?
To get answers, Sage Advice sat down with Rafael S. Lajeunesse, visionary CEO and founder of ReachX. This fintech firm empowers growth-stage companies to find top-tier talent and deploy cutting-edge tools to boost their fundraising, M&A, and overall financial activities.
ReachX aims to dismantle the traditionally manual and time-consuming processes associated with corporate finance and consulting, making them more efficient.
Rafael, who boasts a diverse professional portfolio, including stints at McKinsey and JP Morgan, says: “Our main focus is partnering with growth-centric companies from Series A and beyond.
“We work alongside various financial players—from venture capital and private equity funds to private debt funds and family offices.”
Based on our conversations, Sage Advice presents 10 hacks that will help you in your search for funding.
Here’s what we cover:
- 1. Showcase a sustainable business model and a clear path to profitability
- 2. Understand key business trends
- 3. Take advantage of the global markets
- 4. Embrace fundraising innovations
- 5. Use data you can back up
- 6. Get the right support
- 7. Build genuine relationships
- 8. Understand the importance of ESG
- 9. Show investors your potential for long-term sustainability
- 10. Prepare for virtual pitches
- Final thoughts
1. Showcase a sustainable business model and a clear path to profitability
Rafael says investors now seek companies with sustainable business models and a clear path to profitability. They’re expecting start-ups in the fundraising stage to achieve profitability much sooner.
He says: “The old model of focusing solely on scaling with a vague 5-year profitability plan is increasingly viewed as risky.
“To address this, companies need to have a concrete plan for achieving profitability in one market before expanding into another.”
Fundraising is time-consuming, potentially taking up half of a CEO or C-level executive’s time. Rafael says: “This becomes even more demanding given the increased caution among investors due to recent market complexities.
“Investors are scrutinizing business models more carefully, demanding more information, and negotiating valuations more aggressively.”
Relying solely on traditional VC funding can be limiting. It might be advisable to diversify your funding strategy by exploring alternative options like angel investors, corporate venture capital (VC) arms, government grants, crowdfunding platforms, and strategic partnerships.
Each funding source has unique pros and cons, making it essential to choose those that align best with your vision and growth strategy.
2. Understand key business trends moving forward
You must keep track of pivotal trends that promise to redefine which sectors could attract funding and support.
The tech sector has heavily dominated the past 2 to 3 decades, specifically, companies focusing on software, data, and productivity tools.
But Rafael believes that we’re at the cusp of a paradigm shift.
Escalating global challenges in health, the environment, and climate change are increasingly capturing the attention of both entrepreneurs and investors.
Given these issues’ sheer magnitude and urgency, it’s reasonable to predict that companies that define the next decade will be those seeking innovative solutions in these sectors.
Rafael says: “Currently, companies like NVIDIA are leading in areas like AI chips, but I foresee a pivot toward companies addressing more urgent problems like water management, rising temperatures, and ageing populations.”
3. Take advantage of the global markets
The modern business landscape is increasingly interconnected.
Tapping into global markets allows companies to access larger customer bases, diversify revenue streams, and reduce dependency on a single market.
Emerging regions like Africa are experiencing a surge in technological innovation, while mature markets like Europe already offer cutting-edge financial solutions.
A global approach can significantly improve your chances of successfully raising funds and scaling your business.
- Larger investment funds
Significant investment funds such as SoftBank, Sequoia Capital, and Andreessen Horowitz are investing globally, breaking traditional regional funding patterns.
Access to these funds could mean substantial financial backing, mentorship from global experts, and easier entry into various markets. To attract global funds, build a strong business case demonstrating your company’s global scale and impact potential.
Rafael says: “These funds are not limited to investing in Europe, the US, or Asia; they’re deploying capital across geographies. This phenomenon is relatively new, as venture capital has traditionally been a localized activity.”
- Remote team building
Technological advancements have democratized the process of setting up remote teams.
This flexibility allows you to tap into global talent pools and gain specific skill sets and perspectives that may not be available locally.
Use platforms like Microsoft Teams and Slack for communication and project management. Consider employing services and bringing in software to manage global employment logistics.
Rafael says: “Previously, only larger organizations could manage complex structures, but technological advancements have levelled the playing field.
“Smaller companies can quickly adapt to this model, thanks to new communication tools and employment-of-record services.”
The challenges of going global
- Scale versus presence
A broad global presence does not necessarily mean you’ve successfully scaled your operations.
Industries such as real estate, hospitality, and delivery often require a more localized approach to scaling, as they must adapt to city and country-specific regulations, cultures, and consumer behaviours.
Conduct market research to understand the unique characteristics of each locale and consider using a phased approach to test and scale your services.
- Investor scrutiny
As fundraising grows increasingly competitive, investors are becoming more discerning. Companies that expand globally without achieving true scale risk losing investor interest and funding.
Rafael says, “In the current investment landscape, where fundraising is becoming more complicated, we’re noticing that businesses that have expanded globally without achieving real scale face challenges.
“Investors are becoming more discerning, looking beyond the number of offices and locations a company has.”
Develop key performance indicators (KPIs) that measure genuine impact rather than just output metrics like the number of offices. Present these metrics transparently to investors to demonstrate your company’s growth and potential.
4. Embrace fundraising innovations
Rafael says digitization can create deeper relationships between businesses and investors.
He says: “We’re gradually moving toward a more transparent, efficient, and potentially liquid investment landscape.”
This shift isn’t just theoretical; it’s already taking shape through the trajectory of emerging technologies like artificial intelligence and blockchain.
The investment world has been relatively slow to integrate these technologies—largely because investment is inherently human-centric and requires complex decision-making.
But Rafael believes this will change: “Businesses have adopted technological solutions for simpler processes like payments and transfers, and more complex processes are next in line for this transition.”
Familiarise yourself with blockchain technologies
Blockchain can enhance the integrity and efficiency of your fundraising efforts.
For instance, the tokenization of securities can replace traditional share certificates, making transactions transparent and easily transferable. Smart contracts and decentralized ledgers also create a secure environment for managing investor relations.
Investigate blockchain-based mechanisms like Initial Coin Offerings (ICOs) and Decentralised Autonomous Organisations (DAOs), which are innovative ways to raise capital but come with risks such as regulatory uncertainty and code vulnerabilities.
An ICO is a fundraising tool where new projects sell tokens to early adopters and investors, operating similarly to traditional Initial Public Offerings but with less regulation and quicker execution.
DAOs are organizations governed by community voting and smart contracts, aiming for a transparent and decentralized operation.
Rafael says: “The tokenization of securities on the blockchain replaces traditional share certificates with digital tokens, making transactions more transparent and easily transferable.
“However, adoption has been slow, with questions about its economic viability and security remaining.”
Explore crowdfunding platforms
Crowdfunding platforms offer another technology-driven solution to fundraising, making it more accessible and allowing you to reach a broad audience of potential backers.
Evaluate relevant platforms for your industry or region to see how they can fit into your fundraising strategy.
Use AI for investor matching
AI technologies could streamline investor-company matching by analyzing historical data and transaction records.
While generative AI, for example, is still evolving, there’s an opportunity to make the fundraising process more efficient.
Rafael says: “AI can potentially streamline the fundraising process by leveraging historical data and transaction records.
“The challenges arise from constantly changing data sets and the fragmented nature of disclosed investments.”
Use workflow and automated outreach platforms
You can use workflow tools and automated outreach platforms to make fundraising more efficient by speeding up the investor outreach process and increasing transparency.
Rafael says: “These tools use standard software technologies and can reach many investors quickly and transparently.”
Consider alternative financial instruments
Investigate alternatives to traditional finance methods for capital raising and growth.
In the US, you can get SAFE (Simple Agreement for Future Equity) agreements, which allow start-ups to secure investment without setting a specific valuation, providing both investors and founders flexibility for future equity conversions.
Or maybe look at something like revenue-based lending, which offers companies a loan repaid as a percentage of ongoing revenue, providing more flexibility in repayment terms and often not requiring equity dilution, making venture debt more appealing.
Rafael says: “These innovations extend beyond technology, offering a variety of methods to improve efficiency and flexibility in fundraising.”
5. Use data you can back up
Investors, particularly in the venture capital realm, have an insatiable appetite for data, as it validates your business strategies and demonstrates growth potential.
Rafael says that there’s a general expectation for high growth rates in the venture capital realm.
He says: “Limited Partners in venture funds are looking for significant returns, so achieving multipliers like 3X, 4X, or even 10X on growth is often a prerequisite.
“Having detailed data on growth metrics is essential. Most investors, especially venture capital ones, will scrutinize these metrics closely when considering an investment.”
Traditional growth metrics may be less pertinent in sectors like biotech or hardware development until significant sales, revenue, or consumer traction occurs. However, once you reach these milestones, detailed data on growth metrics is still crucial.
That said, a common pitfall in pitching to investors is the presentation of overly optimistic “hockey stick” growth curves in pitch decks. Entrepreneurs often project rapid and significant future growth without substantiating these claims.
Rafael says: “You need to provide evidence of why such explosive growth will occur and show proof of existing traction.
“Often, entrepreneurs feel they’ve already achieved a significant milestone, such as customer acquisition or brand development, and their projections suddenly jump by 5 to 10 times.
“This raises a red flag for investors, who often suspect that the entrepreneurs are simply trying to cater to the high-growth expectations of venture capitalists.”
The key is to use industry-relevant metrics to show real traction and market fit and to provide solid evidence for any projected growth.
“Interest will likely wane if an investor probes deeper and finds that you can’t support your claims with solid evidence.
“The classic mistake is not providing enough documentation for the growth trajectory and failing to make a convincing case.”
6. Get the right support
Prepare, prepare, prepare. Have a good story and expect to change your business model if necessary.
Rafael says: “This includes creating comprehensive marketing materials, preparing for investor Q&A sessions, and organizing your financials and documentation.
“The closing phase of fundraising is often underestimated. It involves meticulous attention to details, like negotiating term sheets and covering legal aspects.”
Consider bringing in advisors with critical expertise and additional bandwidth to navigate this intricate process.
Find people to guide you in selecting and navigating the funding sources most aligned with your company’s needs and future governance.
Rafael says: “While companies with multiple funding rounds may feel confident enough to proceed without an advisor, first- or second-time fundraisers, as well as companies conducting larger rounds, could benefit from expert guidance.”
7. Build genuine relationships
It’s important to understand that building genuine relationships with investors goes beyond securing capital; it’s about establishing ongoing dialogue and trust.
A transactional approach to fundraising is outdated, and investors are looking for deeper connections and alignments with the start-ups and scale-ups they support.
Hence, it’s vital to regularly update potential investors on your progress, challenges, and needs, even before initiating a funding round.
Your relationship shouldn’t stop once the investment is secured
Rafael says that a common complaint among investors is that companies (particularly smaller ones) go silent for months or even a year after fundraising, leaving investors in the dark.
He says: “Regarding best practices, having a communication plan is crucial. What are you going to discuss? Which metrics will you share? Regular and rigorous communication is essential, as well as maintaining an open dialogue with your investors.”
This proactive, regular, and transparent communication will make your investors feel like partners or team members rather than just financial contributors.
Investors appreciate this approach, and Rafael says he’s seen businesses that neglect communication face challenges later. Investors will likely question why they haven’t heard anything and hesitate to contribute further.
“When they need additional capital from their investors, they question: ‘Why haven’t you communicated with me in the last 6 months or year? Why should I give you more capital?”
Therefore, it’s best practice to involve your investors in significant decisions and keep them in the loop, as this cultivates a strong investor relationship that can safeguard your long-term success.
“Best practice is treating your investors like partners or employees. Maintain regular communication and events and share relevant metrics that guide your business.”
8. Understand the importance of ESG
Environmental, Social, and Governance (ESG) factors have become crucial in the start-up ecosystem, attracting investment and pushing start-ups and scale-ups to embed sustainable practices.
Rafael says: “The challenge with ESG is that currently, frameworks are primarily designed for larger companies. Translating these frameworks into the venture capital world is difficult due to insufficient data.
“However, there’s growing interest in energy investments. Investors, particularly large pension funds, are demanding ESG frameworks.
“They’re instructing venture capital firms to implement ESG policies, focus on energy, and conduct due diligence with that perspective.”
This trend is particularly prominent in sectors like food and health. Rafael explains: “Implementing ESG considerations changes the due diligence process for investors. They must now examine a company’s carbon footprint, governance, and social impact.”
To meet this emerging demand, you should incorporate ESG principles into your core values and operations, making it a focal point in pitches and presentations.
From a practical standpoint, this also means that you might need more robust tools for data collection, analysis, and reporting to satisfy investor due diligence on ESG metrics.
“From your company’s standpoint, you’ll require more tools to collect, analyze, and report information.
“This has led to the emergence of services aimed at ESG compliance accounting, tracking energy consumption, water usage, and governance metrics.”
Rafael believes that a new generation of entrepreneurs, who are acutely aware of the ongoing climate crisis, are driving this shift, making ESG considerations not just an investor demand but an evolving business priority.
9. Show investors your potential for long-term sustainability
Sustainable growth is increasingly becoming the new mantra for investors and start-ups alike, overshadowing the old paradigm of hypergrowth at any cost.
Prioritizing long-term viability over short-term gains may slow initial growth, but it positions your company for sustained, resilient success.
Rafael says: “Investors are increasingly wary of companies prioritizing growth over profitability.
“While rapid growth can be appealing, if there’s no clear path to profitability, investors recognize that they’ll likely need to contribute to multiple funding rounds in the future.”
You may focus on capturing market share and assume success will follow, but this approach can lose sight of when or how your business will become profitable.
Rafael believes that being unprofitable is justifiable only when there’s a need for substantial investments in scaling technologies, as seen in sectors like hardware, pharmaceuticals, or biotech.
“For companies with lower upfront investment needs, investors’ expectations have shifted: sustainable, profitable growth is now the key metric for success.”
10. Prepare for virtual pitches
After coronavirus, the dynamics of business pitching have undergone a significant transformation.
Platforms like Microsoft Teams, Zoom, and Slack have become ubiquitous for team meetings and pitching to potential investors, making virtual presentations the new standard in the start-up ecosystem.
While the medium has changed, Rafael says that the core principles that make a pitch successful remain consistent with those of traditional, in-person presentations.
He says: “The essential elements remain the same as in-person pitches. It’s crucial to have good lighting and a well-designed pitch deck.
“Being articulate is key, as well as having visually appealing slides. Preparation is vital; you should have answers ready for likely questions.”
Unlike in-person meetings, where body language and presence can sometimes fill in the gaps, your verbal responses must be especially on point in a virtual setting.
Preparation will help you navigate a Q&A segment more fluidly, demonstrating your business acumen, adaptability, and poise.
Financial models, market research, and other pertinent data should be as rigorous and well-prepared as an in-person pitch.
Rafael adds: “While the experience may differ from a live pitch, the importance of having quality supporting materials remains the same.”
In a virtual setting, ensure these materials are digitally easily shareable via screen sharing during the pitch or through secure document-sharing platforms.
Final thoughts on the future of fundraising
These 10 money-raising hacks are strategies and investments in your start-up’s or scale-up’s longevity and scalability. Remember that your business’s financial future hinges on numbers and a holistic approach.
- Your business model should be more than profitable—it should be sustainable.
- Your relationships should go beyond transactions—they should be genuine partnerships.
- Your data should not just tick boxes—it should tell a compelling story of your long-term vision.
Armed with these tools, you’re not only raising funds. You’re building a robust, resilient enterprise capable of weathering any storm.
So, prepare those virtual pitches, hone your value propositions, and walk into every meeting with the data to back up your claims. You’ll thrive by anticipating change and making every move a calculated one.
By staying agile, building meaningful relationships, and putting a premium on sustainability and ethical governance, you’re not just scaling—you’re setting the stage for enduring success.