Milestones That Friends, Family, and Founders Care About Before Investing

Seed Stage Milestones from The Startup Garage
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The most important principle of startup fundraising that every entrepreneur needs to know is: raise enough capital to achieve a set of milestones that will allow the company to attract the next round of investment. As a startup with zero to very low revenue, your friends, family, and cofounders do not expect you to have achieved very many major milestones. Nonetheless, there are a few key milestones that you will need to achieve in order to get them to sign over the check.

Business Plan

Ideally, you will have a business plan with complete market research and a financial model. You will need demonstrate the product, its advantages, who the market is, how the business will run, capital requirements, and financials demonstrating the financial model. If your product is not developed, you will need some sort of mockup.

Personal Investment

Investors at any stage like to see that you have committed personal funds in addition to sweat equity. First, if you aren’t willing to assume any of the risk, neither will investors. Additionally, by putting some skin in the game you are showing your commitment to the company.

Capital and Milestone Timeline

Part of your pitch documentation needs to be centered on your capitalization strategy. You will need to reverse engineer a timeline of capital infusions based on the key milestones that you will achieve with each round of capital. You will want to demonstrate this timeline and the strategy behind it as well as the effects of accomplished milestones on the company’s future valuation.

Market Validation

You likely will not be in a position to achieve the ideal form of market validation: paying customers. However, you may be able to secure letters of intent, customer surveys, or even customer endorsements based on mockups that you have shown them. Market validation can also come in the form of successful companies selling similar products. If none of this is possible, you will want to convincingly demonstrate that there is a real need for the product in the market.

Prior Success

The best milestone that you can achieve to raise your chances of obtaining friends, family, and founder funding is prior success. Ideally, you will want to demonstrate prior startup success as well as prior success with raising capital. If you are a first time entrepreneur you can demonstrate prior career success and entrepreneurial skillsets.

Want To Learn More?


Download our free Raising Capital From Friends, Family & Founders eBook.

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About Tyler Jensen

I work with entrepreneurs who are looking to attract investment and get out of the "Garage". I am passionate about helping entrepreneurs start companies that matter. I helped launch over 100 Companies, Non-Profits and Social Enterprises. I consider myself a serial entrepreneur, startup coach & trusted advisor. * Launching New Companies (For Profit, Non-Profit and Social Enterprise) * Expert Business Plan Writer * Extensive Network of Business Relationships focused on Launch & Rapid Growth of New Companies * Startup, Growth, Marketing, Technology, Web, Business Systems * Trusted Advisor to CEO’s & Entrepreneurs * Capital Raising Strategy Development * Startup Team Development The first company I started and sold is VAVi Sport & Social Club which grew to over 25,000 members in six years, was recognized as San Diego’s 30th fastest growing private company in 2006 by the San Diego Business Journal and 32nd fastest in 2007, and sold for over 25X the capital investment.