By Nathan Beckord
Over the past five years, I’ve asked more than 250 founders, investors, and advisors from around the world to share their fundraising stories so emerging founders can learn from their experiences. Whether you’re looking for investor targeting tips, advice to nail your pitch, or hacks to run a solid round, I’ve probably talked to a founder who’s been in your shoes.
Here are some of the most valuable fundraising advice I’ve come across in the past 12 months.
Steer clear of the one-size-fits-all fundraising process
When Mike Bell faced a down round (a lower rating than the previous round) for Miso roboticsSeries C, he turned to crowdfunding. Miso raised $60 million in its Series C, D, and E rounds through crowdfunding alone, which Bell says is the ideal path for the right startup. “You have to be able to tell the story very simply and very clearly,” he says. “And it has to resonate with people.”
Find the “Super Founders”
When looking for early investors for his startup Captain, Demetrius Gray went after founders who raised at least $50 million or left for more than $100 million. These veteran entrepreneurs provided Gray with valuable feedback and advocated for him with colleagues and investors. “With that approval, it will continue to open doors,” he says. “If you need an introduction to a VC, it just gets easier because you have previous founders sitting at your table.”
Ask for an introduction
“Enlisting investors to help us think about how we can build a business that is bankable and potentially viable – I couldn’t recommend it more highly,” says Astrid Atkinson of cleantech startup camo energy.
Knowing she was building technology for a notoriously difficult customer segment, Atkinson leaned on her network for warm introductions to expert investors. She then began conversations about what a viable business would look like, delving into details of the business model and go-to-market strategy. Some of those conversations turned into checks for friends and family from Camus Energy and Series A rounds.
The more the merrier – invite everyone to your party round
After traditional rounds of fundraising with previous startups, seasoned entrepreneur Richard White opted to optimize his fundraising efforts by welcoming as many investors as possible. Its Zoom app, fathomhas more than 90 investors, including top VC funds such as Maven Ventures and Character.vc, as well as the founders and CEOs of Reddit, Twitch, and Cruise.
“I would like to have thousands of small investors,” he says. “It’s the person who writes three checks a year – it doesn’t matter how many – from their own piggy bank who will care much more about your bottom line than some big VC where [your funding] is one of 10 checks they will be writing this quarter.”
Send cold emails
Plenty of fundraising advice focuses on networking – and with good reason. But founder Michael Bamberger instead found almost complete success through cold outreach, raising $7 million for software startups Tetra Insights. When warm intros didn’t work, he redoubled his research to target the best-fit investors, then emailed his first batch of five funds, one of which became his lead investor. “When I changed my criteria to finding suitable people,” he says, “the process moved very quickly.”
Provide value and build relationships
Scott Kitun, host of the Technori podcast and co-founder of custom song platform Zangvink, is an expert at playing the long game. He leveraged the relationships he built by running a valuable podcast to raise the first $1 million for Technori in 2018 and to fill a slew of pitch meetings for Songfinch’s Series A. While considering an exit for Technori, he built a lucrative newsletter and readership – an ideal match for taking over a company KingsCrowd.
He advises founders to work on creating value even before launching a start-up: “I would focus on building a single asset, [one] you know your [potential] buyers desperately need.”
What it comes down to: Not every startup is destined for the traditional fundraising process. Know what your business needs and don’t hesitate to go for it.
Take your pitch meetings to the next level
Let investors know what to expect
Frame your meeting as you go, says serial entrepreneur Iddo Tal, whose live online course Raise the round teaches investors his step-by-step method for fundraising success. Telling investors in advance what to expect from the meeting—one of the steps in his seven-step approach to meetings that close deals—demonstrates your organization and preparation, and the effect on investors is immediate.
“I see their shoulders relax,” he says. “They know they have five minutes to be quiet, and then… [it’s] their show to ask questions.”
Give investors a chance to catch their breath
Captain’s Demetrius Gray also found success in acknowledging the back-to-back pitch tax schedule that investors often face. He uses this short script to give everyone a break before turning back to the field: “Hey, I see you’ve had a busy day. I can’t imagine how many meetings you’ve had so far. I’ll give you 30 seconds to catch your breath. And then I will start.”
Stick to the task
Investors’ busy schedules often leave founders with very limited opportunities to get their message across. Eitan Reisel, founder of gambling fund vgames, advises keeping your pitch deck short and sweet. “In two seconds I should understand what you’re talking about,” he says. “Tell the story with no more than eight slides: who you are as founders, what you are building and what the vision is.”
Eva Dobrzanska from start-up consultancy True height reiterates this advice and points out that a pitch deck is not a sales pitch. She doesn’t recommend going into detail about products or technology in your pitch deck. “I want to know what the product is, but then show me the results,” she says. “Show me the traction. Show me your go-to market. Show me where the people who are interested in that product are.”
What it comes down to: Lead a great meeting by setting expectations and staying focused on what matters most to investors.
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Identify your champions
The success of your startup depends on how good your team is, says Biju Ashokan, founder of the Radius agent platform for brokers. When it comes to hiring, he looks for people who have worked on a successful project before – and it doesn’t necessarily have to be a startup. “If they’ve seen growth and seen growth, they know what works and what doesn’t work,” he says. “Ask them really challenging questions. Make it seem like your company will work really hard and see how they respond to those questions.
For related co-founders Justine Palefsky and Tas Amina, a major part of laying the groundwork for their home-swap membership platform was serious “founder dating” by diving into tough conversations beforehand and understanding what each founder brings to the table . “Over time, that has led us to look around the corner a lot,” says Amina. “The amount of trust we have in each other allows us to break down issues and get to work with them.”
Don’t try to do it alone. The startup journey isn’t easy, so finding the right partners to walk alongside you can make all the difference. “You have to play the cards you are dealt. But wherever possible, find people to join you,” says Fathom’s Richard White. “That is sometimes the hardest thing to do. I’ve struggled for a long time to be the lone wolf in the woods, and you don’t get much done that way.”
Find the “true believers” in your network. Strong connections with investors can give you a huge head start whether you’re raising capital for your startup or raising your own venture capital fund. But as John Zeratsky found out when he was looking for limited partners for his fund Character.vc, even the best connections need to understand the value of the business model before writing a check. “We had to understand the landscape of limited partners investing in venture and figure out who was looking for this kind of exposure versus those who just attend a meeting because we know them,” says Zeratsky.
What it comes down to: Surround yourself with people who believe in your vision and will make your business a success.
Build a strong foundation to ensure fundraising success
From key hires to finances to detailed documentation, Mountside Enterprises founder Jonathan Hollis recommends a lengthy checklist for founders preparing to fundraise. Near the top of that list? A robust financial model with thoughtful growth projections for multiple future scenarios, which is a critical element in addressing potential investor concerns.
“As an investor, I can [look at the assumptions and see] what happens if my growth doesn’t double year after year,” he says. Potential investors can also predict “what will happen if it takes six months instead of three months for my new salespeople to be hired [become] being productive and bringing in new customers, what happens if my customer numbers drop.”
If a strategy is good for fundraising, it’s good for building a great company, says Jason Yeh van Adamant enterprises. The veteran entrepreneur and investor creates content to support and educate founders on their toughest challenges, including fundraising.
He says founders need to stop separating fundraising preparation from growing their business: “I believe the best fundraising is to show that you are a great company and worth betting on, and then do everything you can to get investors to discover that.”
Make sure your hard work is reflected in your outreach. For fund manager Paige Finn Doherty of Behind Genius Ventures, a well-positioned cold email can help a startup stand out. That’s especially important when only 0.5 to 1% of those who contact her fund get a check. “Be very clear [about] that problem,” she says. “Why are you in a unique position to solve it? What steps have you taken to validate that the problem is really big and that people are willing to pay?”
What it comes down to: Invest time and effort in building a strong startup – the returns will be worth it.
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