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Milestones and Raising Capital From Investors

Milestones help demonstrate progress in your startup company and are a very important tool for raising capital from both angel investors and venture capital firms.

Investors want to see some tangible results from their investment and milestones are a great way of demonstrating these. Some milestones are measurable (sales figures, new distribution agreements) and some are not (customers showing interest at tradeshows).

Milestones for each company are different and here are some examples:

  1. Hired key developer of product
  2. Completed prototype
  3. Hired qualified CFO
  4. Hired Business Development Manager
  5. Sold to our 100th customer
  6. Negotiated a distribution agreement
  7. Secured a new funding round
  8. Achieved $20,000 per month in revenue
  9. Reduced cash burn rate by 20%
  10. Received a line of credit from our bank

Using milestones to impress potential investors:

Create a dozen milestones that are relevant to your business and current stage. Firstly, see if you can complete any of these milestones on your own and without funding from investors. The more milestones you satisfy yourself, the more you will be able to impress investors.

Then estimate how much money you need to achieve each of your remaining milestones. Provide a buffer to give yourself room, in case it takes you longer or you need more capital than first anticipated to reach your milestones.

Then tally the total funding you need to complete all the milestones in your list. This will give you an idea of how much capital you need to complete your set milestones.

Be clear to investors on what it would mean for the business if you were to achieve your milestones. If you expect to be profitable, then say so. If, on the other hand, you expect to still be cash flow negative and would require another funding round then that is ok also, but you need to tell investors upfront so that they know what to expect.

You can now see the importance of milestones to both investors and founders. It is important to include your milestones in your pitch deck, as it will help you determine the amount of capital you need and the use of funds.

It also provides investors with confidence that you have thought about your business and have a plan for deploying their capital to create value in your business.

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