Congrats! You’ve validated that your startup solves a problem and you're seeing growing demand for your SaaS solution through your increasing revenue and customer retention metrics. Now what?
Startups looking to maintain their momentum typically need about 18-24 months of runway at this critical point. And there couldn't be a better time to give your startup the gift of extra runway than the end of the calendar year.
3 Reasons to Extend Your Cash Runway Before 2024
When you're growing a startup, timing is everything, particularly if you've got competitors nipping at your heels. Not only is it important to manage your cash runway and your fundraising strategy to keep the business growing and running smoothly, but there are also advantages to starting a new year ready to hit the ground running.
Over the last few years, we've seen a surge in startup capital needs from December to March. In fact, over 30% of our clients secured non-dilutive capital during these months.
Here are the reasons startups say it's smart to start the new year with extra runway:
1. Gain a competitive advantage
Instead of spending Q1 sorting your books, you'll have a budget and strategy set to start the year firing on all cylinders. Securing capital now means you can start recruiting talent (a lot of people switch jobs at the end of the year!), expanding product development, scaling productivity, building new partnerships, planning events, procuring new tools, and more.
Romeo Elias, President and CEO at Intellect, a QMS Platform, shares his experience:
“While we received multiple rounds of funding from Lighter Capital at varying times, we found that strategically having access to capital at the beginning of the year, allowed us to make key hires to launch our new products and stay ahead of the competition.”
2. Boost momentum and rocket into the new year
Be ready to hit BIG goals next year. Our savvy tech clients tell us that raising capital at the end of the year is a strategic move that can propel the business through the holiday slow-down and well into Q1:
“Non-dilutive funding is a perfect fit for the bootstrap ethos designed for long-term and sustainable growth via truly impactful deep-technology such as ours at Spiketrap. Lighter Capital has allowed us to focus on building a game-changing company, not pitch decks.”
– Kieran Fitzpatrick, CEO, Spiketrap
3. Prepare for turbulent markets
If you're working to increase net sales, and in turn drive your SaaS valuation up, you need the cash to get you there, even through an economic slowdown. Otherwise, your growth will be too anemic to hit your valuation goal when it's time for your next big round of fundraising. If you're generating revenue, it's smart to plan ahead and pad your runway with enough cash to survive pockets of turbulence in the economy.
Turn Your Recurring Revenue into Runway
The tech industry is seeing a major market correction, and some think capital fundraising may be in for a “long winter.” In a down market, angel investors become more cautious and look to invest in safer asset classes while they wait out the storm — these funds can dry up quickly. Venture capital investors tend to stay in the game, but their investment strategies will change. You can expect them to be more diligent and slower to deploy funds, too.
Fundraising is hard enough in a good economy! In the best of times it can take 12-24 months (or longer) to raise capital from angel investors and VCs. It takes a lot of your time away from your business and only a very small percentage of companies ever win this prized funding. Startups need other options to fund their runways.
Good news: if you've got recurring revenue, you can get the capital you need to weather the storm.
Lighter Capital revolutionized startup fundraising by making it easy for entrepreneurs to quickly access capital with zero dilution and full control over how to use the funds.
Here are just a few of the benefits of non-dilutive startup financing solutions:
Retain ownership and control: Diversify funding sources to keep your options open and retain ownership and control. We won’t ask for equity, personal guarantees, or a board seat.
Ease of access to capital: Get up to $4M in capital funding, with the ability to mix and match based on your business needs.
Transparency: Get funding based on what you’ve built — not who you know. Our tech-enabled, objective application process eliminates biases.
Innovative financial offerings: We find financing to fit your stage of growth and long-term business goals.
Community: Access a network of successful entrepreneurs that want to help you grow.
And we've been around the block a few times. Lighter Capital has provided financing to 500+ companies, totaling over $300M through over 1000 rounds of funding.
Lighter Capital’s easy, transparent, and consistent access to capital led Aisle Planner, who raised 6 rounds of funding with us, to become an unexpected COVID success story in the wedding and event planning industry.
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