When it rains, it flows. The bleak outlook for startup funding in early 2022 due to lingering pandemic uncertainties has only worsened following a global market downturn and war in Ukraine.
CB Insights predicts a drop of about 20% in total venture capital investments from the first to the second quarter, leaving ambitious start-ups scrambling to fight for the scraps.
This crisis is a particularly unpleasant setback for entrepreneurs hoping to advance climate-focused principles and social change. It is becoming increasingly difficult for green companies to raise funds for large-scale innovative projects, mainly because most investors still associate “making an impact” with high risk.
More than ever, green startups now need to refine their strategies for raising venture capital funds during the scale-up phase, especially as they begin to assess their defining values against their finances. From dedicated impact funds to value-based venture capital firms, funders tend to back companies that have demonstrated the ability to scale.
Due diligence is not about checking boxes or filling out paperwork; it’s about creating lasting value for you, the portfolio company.
Here are five things green founders should remember when seeking venture capital funding right now.
When it becomes reproducible, you can scale it
Do you remember when you raised your initial funding? You’ve probably presented a minimum viable product and some initial consumer research, and you’ve been supported for it.
But the investment climate has changed, and now your business must too. The next phase isn’t about proving your concept or telling your founder’s inspiring story – it’s about growing your existing business, attracting new customers and customer segments, and entering new geographies. .
All the while, you need to show potential investors why they should commit their fiercely coveted cash to your scaling efforts.