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Advice for raising follow-on funding in 2017

By November 1, 2016Article

Raising a Series B or C in 2017? Then get ready for tougher-than-before scrutiny of your sales and marketing engine. In this article, I’ll talk about why and what you can do to prepare. 

The good old days of next rounds 

Once upon a time, things were simpler. Your early-stage funding aimed to de-risk your technology. To raise your next round, you had to begin to more substantively show a real market need and that you could deliver on a meaningful value proposition. That is, you needed to start to show happy, paying customers a sales and marketing strategy and a sales funnel. A Series C round (with corresponding valuation) would need a lot more validation than a Series B. 

That meant metrics, processes and results; and you built these as part of your maturation as a company. You added sales execs, CRM systems, inside sales and maybe some marketing automation coupled to lead gen, etc. 

Why the bar is getting higher

The bar is getting raised for a set of interrelated reasons:

  1. It’s easier to build a minimum viable product (MVP): Open source, agile development, cloud services and outsourcing all make it easier to get to minimum viable product. That means more companies – your competitors – will secure their first customer wins at the same time as you. Who’s to say who will pull ahead?
  2. There’s more money chasing early-stage deals: That fuels all those MVPs.
  3. Your competitors can get those early wins: There is enough sales expertise out there, coupled with the extended networks of investor and executive networks, for your competitors to secure those first wins using their MVPs.  

That means a more crowded field competing for those follow-on investments. And that means you need to show you designed and built your company to break the mold from a sales and marketing point of view, so that you’ll be the breakout leader. This speaks to your corporate DNA and needs to be backed up by proof. And investors are going to dig deeper to look for this. 

Here’s how you zoom ahead of the pack 

Here’s how to separate yourself from the pack and be ready to do a quality raise in a tougher climate:

  1. Make sure your strategy is razor sharp and fire hardened: This is Job #1 for us at Grey Heron when we start working with a client. It needs to make sense, be distinctive/differentiated and feel like it can tap into real and sizable markets.
  2. Talk the investor’s language: See “When raising money, show how you convert investor dollars into enterprise value.”
  3. Immerse your company in genuine, leading-edge sales/marketing best practice ideas: This extends across your whole company, not just your sales team. A good hub for this leading-edge thinking? See “Selling Power,” driven by Gerhard Gschwandtner plus his conferences. You’ll find more good insights from Anthony Iannarino on creating the need and Anneke Seley and Britton Manasco on “Next Era Selling.” See “Moving to Sales 3.0” for my overview of high-impact ideas from Gerhard’s most recent conference.
  4. Put genuine, leading-edge sales/marketing best practices into action: That may range from the “mundane but hard” areas like sales training focused on actual skills development and highest-leverage parts of the sales cycle; on up to predictive analytics to improve forecasting, optimize marketing spend and increase win rates; new uses of cognitive computing and artificial intelligence to identify and develop prospects and customers; and more.   

So, to raise a follow-on round next year, it’s time to step up and show how you’ll pull ahead of the pack through innovation on your sales and marketing engine. 

Steve Weiss is co-founder of Grey Heron, a management and strategic marketing consulting firm. Steve has helped executives and investors at over 130 companies turn technology into substantive businesses, in areas including the Internet of Things, cloud/SaaS software, energy and resource efficiency, cleantech, and advanced materials. He has also held research, development and marketing/business development roles at Serious Energy, IBM, HP and startups. Contact Steve at; follow him on LinkedIn.









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