Financial statements are vital to investors. But how do investors use financial statements? Before your meeting, learn what they want to see and why.
June 7, 2021
Landing a seed round funding for your SaaS startup can be an uphill struggle—as a three-time co-founder and angel investor, I know how challenging the fundraising experience can be. Below is my advice on which sources to seek SaaS startup funding from, how to find the right investors, and tips on how to close the deal.
By the time your startup reaches the seed stage, you’ll likely have invested some of your own money and perhaps worked with an incubator or accelerator to help develop your business idea. For the seed round, angel investors and venture capital (VC) firms are the most common sources of SaaS funding.
Angel investors are individuals who make relatively small investments in early-stage businesses. You can usually secure seed round funding quickly from angel investors because they are the sole decision-makers; plus, because most angel investors have an entrepreneurial background, they can often give advice and practical knowledge based on their experience, and offer mentorship along the way.
To find relevant angel investors for your startup, take a look at the following resources:
SaaS venture capital firms represent multiple limited partner investors and can usually invest much larger amounts. As a result, venture capitalists generally look for products that have proof of product-market fit and some level of traction. Keep in mind that investment from a venture fund often comes with the expectation that your business will grow at an accelerated rate, so the VC’s equity stake in your business rapidly increases in value over a shorter period of time.
If you’re seeking investment from VC funds, take a look at the following platforms and resources to find relevant SaaS capital firms:
Identifying The Right Investors For Your Startup
It’s important to do your research and reach out to the best possible investors for your business. A few best practices for identifying the right investors for your startup include:
By targeting your fundraising efforts on relevant investors and early-stage investment firms, rather than ‘spraying and praying,’ you’ll earn a much higher rate of response from investors.
Once you’ve researched SaaS investors and identified those you want to approach, most founders will cold email investors until they make a connection. If you’re using this outreach method, ensure your emails are personalized and brief. However, be aware that cold emailing doesn’t have a high success rate.
The most effective way to secure a meeting with a potential investor is through networking: If you can get an introduction to a potential investor from someone they respect, it’s much more likely that they will take you seriously. Socializing with investors also allows you to build a relationship with them and gives you an advantage when you’re ready to pitch.
There are a few key startup characteristics that will impress potential seed round investors and increase your chance of securing SaaS startup funding:
Zeni is a modern, full-service finance firm that handles startup bookkeeping, accounting, and CFO needs, freeing up founders to focus on growing their business. Zeni helps tech startups prepare for fundraising processes of all funding rounds — from seed to Series A, Series B, and beyond—by building financial statements, generating professional, realistic financial projections, and assisting with the creation of the finance slides for your pitch deck. Plus, Zeni can advise you on all the financial decisions that come with growing your business, from choosing the best bank accounts and credit cards for your startup to determining how to set up your accounting software.
Once you start working with funders, the Zeni Dashboard makes it easy to share the high-level data that investors care about. The Investor Access option in the Dashboard allows funders to see real-time metrics, including your net burn, runway, and cash zero date, as well as your financial statements (P&L, balance sheet, and cash flow statement), without giving full admin permissions and keeping transaction-level detail confidential.