Why Every Startup Needs a Virtual CFO Before Their First Funding Round?

Before doing the first funding round, what are those things that every startup needs to understand? And how a Virtual CFO for funding helps a startup in those things before entering the wider market for a startup.

Today’s startup founder needs fast and hurry growth for their companies. Due to this, they don’t think about what to do before their first funding round or how to manage those funds for their business. As a result, they start losing their funding and even investor-ready startups. But some startup founders who have knowledge of virtual CFO services hire one for their funding-related issues. After hiring a vCFO, they get many benefits from it in comparison to those who are thinking of managing their funding on their own.

Mainly, a virtual CFO helps a startup company in providing planning for its first round of funding, teaches them, and provides them with the best planning regarding funding. Also, a Virtual CFO for pre-seed startups provides investor readiness, manages cash flow, and establishes strong financial planning for funding. Involving oneself in the first funding round without having proper knowledge about it becomes risky, especially for startup companies. 

Points to Ensure as a Startup Before Seed Funding

If you are a startup company and are looking for your first round of funding (seed funding). Then there are many things that you have to ensure before taking steps towards this goal. Make sure you have an experienced founding team that manages your activities easily, a validated idea with a Minimum Viable Product (MVP), and a clear business plan and pitch deck. which is also compulsory to conduct some market research to understand the market opportunity and competitors.

Then start with building a data room, and network with investors to build relationships before entering any funding round as a startup. So, these are some short points that things are important before seeking seed funding for your small company.

The detailed parts of these steps are mentioned below:

Have a team & product

1. Before making seed funding, make sure you have an experienced team because investors want a quality and experienced team, especially if you are a startup company.
2. Increase the demand for your products by taking your customers’ feedback and market research to prove to your fundraiser that there is a demand for your product.

Make strategy & planning

1. Understands the size of your market in which you are dealing, growth potential, and competitive landscape.
2. Ensure your vision, goals, and strategy, which also mentions that you should achieve your goals and needs.
3. Make sure to build a clear path to your revenue. This includes your pricing strategy and outlining your long-term financial projections.

Make good communication

1. Define your problem, your solution, and the market opportunity. And your team, with the help of a presentation that tells a story. This is also an important tool before a funding round.
2. Try to get angel investors and virtual CFO services before entering the fundraising rounds. Go to some events and get feedback on your pitch.

Legal and financial guidelines

1. Build up a clear and accurate capitalization table, which helps you in tracking your equity ownership.
2. Calculate how much fundraising you require for your company. And make sure you have a clear understanding of your financial projections for the next few years.
3. Then make sure your virtual CFO startup business is properly incorporated and have all the legal agreements and intellectual property assignments are in order.

A Virtual CFO or a Traditional CFO for the First Funding Round

If you are a startup company that is looking for its first funding and has a limited budget to hire a person, then in that case, you can easily go for a Virtual CFO support for fundraising, who provides you with the best service for your seed funding. But a full-time CFO costs you much for the same services compared to a virtual chief financial officer.

Navigating Financial Challenges with Virtual CFO Support

Who Requires Seed Funding and Its Usage?

Mainly, this category includes those businesses that are startups or in the seed stage and are looking for their first round of funding. Also includes developing a product or service from its initial concept. While the other startups might try to get funding from bootstrapping or friends, and family. And the first funding round comes from angel investors or venture capital firms.

More details on those businesses that require seed funding are below:

1. Startup companies – Companies that have great business plans and proof of concept but lack of money to turn their idea into a great service.
2. Startups with Minimum Viable Product (MVP) – Those small companies which already built an MVP and need capital to develop it further for launching and begin scaling their operations.
3. Early-stage businesses with high strength – Startups seeking to grow their customer base and streamline their business plan to generate income and achieve long-term scalability after showing some initial market traction.

Uses of the first funding rounds

1. The seed funding is mainly used for refining the products and bringing them to the full-fledged market for startup companies.
2. For startups, the first funding round is also used to get market entry by covering the costs of launching the product or service.
3. For gaining growth and a potential startup gets seed funding for hiring specialized persons as their employees which includes such as engineers or sales teams.
4. Small businesses also need seed funding for purchasing initial marketing, office space, and other essential business expenses, which cost them high if they are in the startup phase.
5. Mainly, startups also want the first funding rounds to get funding strategies to acquire the initial customer base.

Need Virtual CFO Services for Seed Funding? Legalraasta is Here for You

Launching a small business isn’t exactly that easy, and getting that all-important first funding round can be a serious headache. That’s where LegalRaasta comes in, which is a certified company and actually knows how to get you through your remote CFO service smoothly, whether you’re running a startup or a more established company. There aren’t many reliable Virtual CFO for funding out there, but LegalRaasta is one of the few that can genuinely provide services for you. Need a GMP certification? Company or LLP registration? NBFC paperwork? We’ve got it covered. Basically, we take care of the complicated legal and financial stuff so you can focus on growing your business. If you want less hassle and more results, our website is the place to start.