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Preparing for a funding round is not just about creating a pitch deck or finding the right investor. For many startups, fundraising challenges arise because preparation starts too late. By the time investor interest comes in, gaps in structure, governance, or compliance begin to surface, slowing momentum and weakening confidence during critical funding rounds.
Founders who secure funding consistently focus on clarity, structure, and readiness long before their first meeting with a potential investor. Here are the key areas founders should focus on when preparing for a funding round.
1. Clarify Your Funding Objective
Before engaging an investor, you need to be clear about why you are raising capital and what the funding will achieve. Professional investors and venture capitalists expect a well-defined use of funds tied directly to growth milestones, whether that is product development, market expansion, hiring, or regulatory licensing.
This clarity also helps you determine the right stage for your raise. Early stage startups often pursue pre seed funding or seed funding to validate the business model and test market fit, while more mature startups and scaleups seek a Series A funding round to scale operations and drive revenue growth. When the objective of a round is unclear, investor conversations tend to stall early.
2. Get Your Corporate Structure Right
One of the most common issues investors flag during an investment round is corporate structure. Many founders underestimate how much this matters until it becomes a blocker to business funding.
Before starting a funding round, ensure your shareholding structure is clear, cap tables are accurate, and shareholder agreements are in place. If your startup operates across multiple markets, institutional investors and capital firms will also want to understand how subsidiaries, holding companies, or cross-border entities are structured.
3. Strengthen Governance and Internal Controls
As funding rounds progress, investor expectations around governance increase. Even at the seed funding stage, investors expect basic governance, including clear decision-making, defined founder roles, and simple reporting structures.
By the time a startup reaches Series A, Series B, or Series C funding, governance is closely scrutinized. Investors look for appropriate board oversight, reliable internal controls, and clear accountability, including how cash flow is monitored and decisions are made as the business scales. Weak governance at this stage can quickly undermine investor confidence and delay a funding round.
4. Prepare for Regulatory and Compliance Questions
Startups operating in regulated or regulation-adjacent sectors, such as financial and virtual asset providers, often face additional scrutiny during a funding round.
Investors will ask how your business complies with local regulations, data protection requirements, and industry-specific rules. Addressing these issues early prevents last-minute surprises that can delay funding or complicate subsequent funding rounds.
5. Align Your Funding Instrument With Your Stage
The type of funding you raise should align with your startup's maturity.
At the pre-seed and seed stage, many early stage startups use convertible instruments or simple seed funding structures. These options allow founders to raise capital without locking in a valuation too early, which makes sense when the product, market fit, or revenue model is still being proven.
As they progress into subsequent funding rounds, investor expectations change. Series A investors typically expect a priced equity round supported by clearer traction, revenue growth, and a more defined business model. At this stage, the funding structure should reflect a business ready to scale, not just experiment.
For Series B and Series C funding, equity remains the standard instrument. These rounds focus on expansion, operational efficiency, and market leadership rather than validation. Some startups also combine equity with grants or strategic funding, but this needs to be done carefully to avoid complications in future rounds.
6. Work With Advisors Before You Start Fundraising
Many founders bring in advisors only after investors raise concerns. At that point, fixing issues becomes more expensive and time-consuming, often slowing the fundraising process.
Working with an advisory firm early allows you to identify and address gaps before investor conversations begin. Advisors can help you prepare financial projections, refine the business plan, support market research, and align strategy with investor expectations.
Velex Advisory is a great example of an advisory firm that works alongside startups and scaleups across Africa to strengthen readiness for business funding well before investor engagement begins. Through support in governance, regulatory positioning, and capital structure, Velex helps founders approach funding rounds with clarity and avoid common diligence bottlenecks.
Final Thought
Whether you are raising seed money or preparing for subsequent funding rounds, early preparation makes fundraising more efficient and builds long-term investor confidence.
Founders who prepare early improve investor confidence, secure venture capital funding more efficiently, and position their startups for sustainable growth.
