When it rains, it gives. The deteriorated prospects for seed funding at the beginning of 2022 due to the ongoing uncertainties of the pandemic have only worsened after a global market decline and the war in Ukraine.
CB insights predicts approximately 20% decline in total VC investment from Q1 to Q2, leaving ambitious young companies scramble to fight for scraps.
This malaise is a particularly unpleasant setback for entrepreneurs seeking to promote climate-oriented principles and social change. It will be increasingly difficult for green companies to raise money for large-scale innovative projects, especially since most investors still associate “impact” with high risk.
More than ever, green startups now need to fine-tune their strategies for raising VC money during the scaling phase, especially as they begin to assess their defining values against their finances. Whether it’s dedicated impact funds or value-based venture capital firms, financiers tend to back companies that have shown they can scale.
Due diligence is not about checking boxes or filling out paperwork; it’s about creating long-term value for you, the portfolio company.
Here are five things green founders should remember when looking for VC funding right now.
When it becomes repeatable, you can scale it
Do you remember when you collected your initial financing? You probably presented a minimally viable product and initial consumer survey and you were supported for that.
But the investment climate has changed, and now your company must too. The next phase isn’t about proving your concept or telling your inspiring founder 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 put their coveted money into your scaling efforts.