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Raising your first round of capital can feel like diving into the deep end without a life vest. As a startup lawyer who usually advises first time founders, I\u2019ve learned that successful fundraising isn\u2019t just about having a great idea but it\u2019s also about being prepared and setting realistic goals.<\/span><\/p>\n Here\u2019s what you should know before you dive into the fundraising journey.<\/span><\/p>\n It sounds obvious, but first time founders rush to raise capital without a clear plan for how much they need and what they\u2019ll use it for. Investors want to back businesses that understand their own runway needs. Whether it\u2019s to build your MVP, scale customer acquisition, or expand to a new market, be crystal clear about why you’re raising and how it ties into your milestones over the next 12\u201318 months.<\/span><\/p>\n Different funding instruments make sense for different startup stages. In Southeast Asia, early stage deals still favour equity financing (i.e. priced rounds), but there\u2019s growing adoption of simpler instruments like \u2018Simple Agreement for Future Equity\u2019 (\u2018SAFE\u2019) notes among local VCs. Each type of legal funding instrument comes with different implications for ownership dilution, valuation negotiations, and legal complexity.\u00a0<\/span><\/p>\n Choosing the right funding instrument can save you significant time, money, and stress down the road, but if you’re using a template agreement, make sure you fully understand its terms or have it reviewed by a startup lawyer to avoid costly mistakes later.<\/span><\/p>\n Also, instead of equity financing, which requires selling shares for cash, you can explore government grants or reward crowdfunding, where you raise funds by pre-selling your product or service.<\/span><\/p>\n First time founders are surprised to learn how much ownership they may need to give up over multiple funding rounds. That\u2019s why managing your cap table carefully from the start is crucial not just to maintain a healthy equity split, but also to avoid legal issues that can arise from a \u201cbroken cap table,\u201d where founders hold too little equity and investors hold too much, potentially making the company less attractive to future investors or acquirers.<\/span><\/p>\n In the end, it’s not just about how much you raise but also how much of your company you still own when you get to Series A, B, and beyond. A slightly smaller round today may be better to preserve your long term control.\u00a0<\/span><\/p>\n Also Read:\u00a0Startup funding rounds: A handbook from seed to exit<\/a><\/strong><\/p>\n Especially at pre-seed and seed stages, investors are really backing you. This may include your team\u2019s ability to execute, adapt, and survive the rollercoaster of startup life. Having strong technical and business co-founders helps, but even solo founders can get funded if they show deep domain expertise, resilience, and a clear vision.\u00a0<\/span><\/p>\n Once you\u2019ve identified a cofounder, make sure to get everything in writing and agree on the terms and economics upfront to ensure everyone is aligned from the start.<\/span><\/p>\n Be ready to demonstrate that you are \u201cventure-backable\u201d, not just investible.\u00a0<\/span><\/p>\n It\u2019s tempting to chase the highest possible valuation, but inexperienced founders often overlook the \u201cfine print\u201d of term sheets, usually things like liquidation preferences and anti-dilution clauses.\u00a0<\/span><\/p>\n Based on our experience advising startups in Malaysia at Izwan & Partners, we\u2019ve seen how a poorly drafted term sheet can burden a startup for years. Get an experienced startup lawyer early, and make sure you understand the market norms for startup deals in your country.<\/span><\/p>\n Savvy investors will scrutinise your legal structure, intellectual property ownership, compliance, contracts, and financials. Messy startup formation (wrong legal structure to wrong shareholding structure) can delay or even kill deals. Make sure your house is in order early. <\/span><\/p>\n Things include filing the appropriate IP properly, maintaining basic financial records, and having founder agreements in place to avoid co-founder disputes.<\/span><\/p>\n Also Read:\u00a0What did we learn from failing to raise VC funding?<\/a><\/strong><\/p>\n The moment you decide to raise, expect it to take 3 to 6 months of active pitching, meeting, negotiating, and following up. It is exhausting, and it will inevitably distract you from building your product or serving customers. Plan ahead. Delegate operational tasks where possible. Line up your pipeline of potential investors early, not when you are already running out of cash.<\/span><\/p>\n Fundraising isn\u2019t just about convincing investors to believe in you. It\u2019s about building a foundation that will support your company\u2019s long-term growth. Southeast Asia\u2019s startup scene has matured significantly, and with more capital available than ever, the bar for founders is also rising. <\/span><\/p>\n First time founders who approach fundraising strategically, not desperately will stand out. Remember, raising money is not the end goal. Building a sustainable and valuable business is.<\/span><\/p>\n —<\/p>\n Editor\u2019s note:\u00a0e27<\/b>\u00a0aims to foster thought leadership by publishing views from the community. Share your opinion by\u00a0submitting<\/a>\u00a0an article, video, podcast, or infographic.<\/p>\n Join us on\u00a0Instagram<\/a>,\u00a0Facebook<\/a>,\u00a0X<\/a>, and\u00a0LinkedIn<\/a> to stay connected. We\u2019re building the most useful WA community for founders and enablers. Join\u00a0here<\/a>\u00a0and be part of it.<\/p>\n Image credit: Canva Pro<\/p>\n The post Fundraising 101: What first time startup founders need to know<\/a> appeared first on e27<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Raising your first round of capital can feel like diving into the deep end without a life vest. As a startup lawyer who usually advises first time founders, I\u2019ve learned that successful fundraising isn\u2019t just about having a great idea but it\u2019s also about being prepared and setting realistic goals. Here\u2019s what you should know […]<\/p>\n","protected":false},"author":1,"featured_media":1234,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[14],"tags":[],"_links":{"self":[{"href":"http:\/\/www.fresnoforeclosure.com\/index.php\/wp-json\/wp\/v2\/posts\/1232"}],"collection":[{"href":"http:\/\/www.fresnoforeclosure.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.fresnoforeclosure.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.fresnoforeclosure.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.fresnoforeclosure.com\/index.php\/wp-json\/wp\/v2\/comments?post=1232"}],"version-history":[{"count":2,"href":"http:\/\/www.fresnoforeclosure.com\/index.php\/wp-json\/wp\/v2\/posts\/1232\/revisions"}],"predecessor-version":[{"id":1235,"href":"http:\/\/www.fresnoforeclosure.com\/index.php\/wp-json\/wp\/v2\/posts\/1232\/revisions\/1235"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.fresnoforeclosure.com\/index.php\/wp-json\/wp\/v2\/media\/1234"}],"wp:attachment":[{"href":"http:\/\/www.fresnoforeclosure.com\/index.php\/wp-json\/wp\/v2\/media?parent=1232"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.fresnoforeclosure.com\/index.php\/wp-json\/wp\/v2\/categories?post=1232"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.fresnoforeclosure.com\/index.php\/wp-json\/wp\/v2\/tags?post=1232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Know why you are raising funds<\/strong><\/h1>\n
Start with the right fundraising instrument<\/strong><\/h2>\n
Understand dilution and your cap table<\/strong><\/h2>\n
Investors are betting on the \u201cteam first, product second\u201d<\/strong><\/h2>\n
Terms matter, not just valuation<\/strong><\/h2>\n
Due diligence starts from day one<\/strong><\/h2>\n
Fundraising is a full-time job<\/strong><\/h2>\n
Final thoughts<\/strong><\/h2>\n