Raising startup capital: 15 founders and investors share their top fundraising tips

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by Nathan Becord

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Build a strong foundation for your business to attract startup capital.

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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 budding founders can learn from their experiences. Whether you’re looking for tips on targeting investors, advice on improving your pitch, or hacks for running a solid round, I’ve likely talked to a founder who’s been in your place.

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Here are some of the most valuable pieces of fundraising advice from the past 12 months.

Consider Crowdfunding

When Mike Bell faced a down round (lower valuation than previous rounds) for Miso Robotics’ Series C, he turned to crowdfunding. Miso raised $60 million in its Series C, D and E rounds from crowdfunding alone, which Mike says is the ideal route for the right startup. “You need to be able to tell the story really simply and really clearly,” he says. “And it needs to resonate with people.”

Find the “Super Founders”

When looking for early investors for his startup Captain, Demetrius Gray went after founders who had raised at least $50 million or raised more than $100 million. These seasoned entrepreneurs gave Demetrius valuable feedback, and they advocated for him among peers and investors. “With that support, it’s going to continue to open doors,” he says. “If you need an introduction to a VC, having previous founders on your cap table makes it easier.”

ask for an introduction

“Enlisting investors to help us think about building a fundable and potentially viable company – I couldn’t recommend it more highly,” says Astrid Atkinson of cleantech startup Camus Energy.

Knowing she was building technology for an extremely difficult customer segment, Astrid tapped her network to make warm introductions to knowledgeable investors. Then he began a conversation about what a viable company would look like, digging into the details of the business model and go-to-market strategy. Some of those conversations turned to friends and family of Camus Energy and checks for the Series A round.

The More the Better—Invite Everyone to Your Party

After raising traditional rounds with previous startups, seasoned entrepreneur Richard White opted to optimize his fundraising by welcoming as many investors as possible. His Zoom app, Fathom, boasts more than 90 investors, including top VC funds like Maven Ventures and Character VC, as well as founders and CEOs of Reddit, Twitch, and Cruise.

“I would love to have thousands of small investors,” he says. “It’s the guy who writes three checks a year — no matter the amount — out of his own piggy bank who’s going to care more about your outcome than some big VC where [your funding] That’s one of 10 checks they’re going to write this quarter.”

send cold email

A lot of fundraising advice focuses on networking – and for good reason. But founder Michael Bamberger found success almost entirely through cold outreach, raising $7 million for software startup Tetra Insights. When the warm intros weren’t working, he doubled down on research to target the most suitable investors, then cold-emailed his first batch of five funds, one of whom became his lead investor. “When I changed my criteria for finding people who fit,” he says, “the process was really quick.”

provide value and build relationships

Scott Kitun, host of the Technory podcast and co-founder of bespoke song platform Songfinch, is an expert on playing the long game. They leveraged the relationships they built to run a valuable podcast to raise the first $1 million for Technory in 2018 and fill a full slate of pitch meetings for Songfinch’s Series A. As he contemplated an exit for Technory, he built an engaging newsletter and readership—a perfect fit for the company Kingscrowd acquired.

He advises founders to work towards creating value even before starting a startup: “I would start by focusing on building a single asset, [one] you know your [potential] Acquirers are in dire need.

Bottom line: Not every startup is destined for the traditional fundraising process. Know what your company needs and don’t hesitate to go after it.

Level Up Your Pitch Meetings Tell Investors What to Expect

Frame your meeting, says serial entrepreneur Iddo Tal, whose live online course Raise the Round teaches investors his step-by-step method for fundraising. Telling investors what they can expect from the meeting—step one in his seven-step method for meetings that close deals—demonstrates your organization and preparation, and the impact on investors is immediate.

“I see the relaxation of their shoulders,” he says. “They know they have five minutes that they need to calm down, and then … [it’s] His show to ask questions.

Give investors a breather

The Captain’s Demetrius Gray also found success in acknowledging the taxing schedule of back-to-back pitches that investors often face. He uses this quick script to provide everyone with a moment to pause before focusing on the pitch: “Hey, I understand you’ve had a busy day. I can’t imagine how much you’ve accomplished so far.” Have meetings. I’ll just give you 30 seconds to breathe. And then I’ll start.

stay on task

Investors’ packed schedules often mean that founders have very few windows of opportunity in which to communicate their messages. Eitan Reisel, founder of gaming fund vgames, recommends keeping your pitch deck short and sweet. “In two seconds, I need to understand what you’re about,” he says. “Tell the story with no more than eight slides: who you are as the founder, what you’re building and the vision.”

Eva Dobrzanska of startup consulting firm True Altitude echoes this advice, pointing out that the pitch deck is not a sales deck. She recommends going into great detail about the 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.

Bottom line: Run a great meeting by setting expectations and maintaining a laser focus on what’s most important to investors.

More articles from AllBusiness.com:

Identify your champion employees

The success of your startup depends on how well your team works, says Biju Ashokan, founder of Radius Agent Platform for real estate agents. When it comes to hiring, he looks for people who have previously worked on a successful project — and not necessarily at 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 look like your company is going to work very hard and see how they respond to those questions.

partners

For Kindred cofounders Justin Palefsky and Tass Amina, a key part of laying the groundwork for their home-swapping membership platform was engaging in serious “founder dating,” diving into an already difficult conversation and figuring it out. What each founder brings to the table. “Over time, this resulted in us seeing a lot of corners,” Tass says. “The amount of trust we have in each other allows us to divvy up problems and run with them.”

Don’t try to go 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 whatever cards you’re dealt. But whenever possible, find people to connect with,” says Fadham’s Richard White. “Sometimes that’s the hardest thing to do. I struggled for a long time with being the lone wolf in the wild, and there’s really not much you can do that way.”

investors

Find “true believers” in your network. Strong relationships with investors can give you a head start, whether you’re raising capital for your startup or raising your own VC fund. But, as John Zeratsky discovered while seeking limited partners for his Fund Character VC, even the best of connections must understand the value of the business model before writing a check. John says, “We had to understand the landscape of limited partners who invest in ventures and figure out who is looking for that kind of risk, versus just people taking a meeting.”

Bottom line: Surround yourself with people who believe in your vision and will help lead your company to success.

Build a strong foundation to ensure successful fundraising

From key appointments to finances to detailed documentation, Mountainside Ventures founder Jonathan Hollis recommends a lengthy checklist for founders preparing for fundraising. Near the top of that list? A robust financial model that includes thoughtful growth projections for multiple future scenarios is a key element in alleviating potential investor concerns.

“As an investor, I can [look at the assumptions and see] What if I don’t double my growth year-on-year,” he says. Potential investors can also speculate, “What if it takes six months instead of three months for my new sale?” [become] Are productive and bring in new clients, what if my client count drops.

Jason Yeh of Adamant Ventures says, if any strategy is good for fundraising, it’s good for building a great company. Seasoned entrepreneurs and investors create content to support and educate founders about their toughest challenges, including fundraising.

He says founders should stop thinking of fundraising as separate from their companies: “I believe the best fundraising is to demonstrate that you are a great company and that you The bets are worth making, and then doing everything you can to find investors.”

Make sure your hard work is reflected in your outreach. For Paige Finn Doherty, fund manager at Behind Genius Ventures, a well-positioned cold email can help a startup stand out. This is especially important when only 0.5 to 1% of those who contact his fund receive a check. “get really clear [about] That problem,” she says. “Why are you uniquely positioned to solve this? What steps have you taken to verify that the problem is really big, and people are willing to pay?”

Bottom line: Invest the time and effort in building a strong startup—the returns will be worthwhile.

About the Author

Nathan Becord is the CEO of FounderSuite.com, which builds software for raising capital. FounderSuite has helped entrepreneurs raise over $3 billion in seed and venture capital since 2016.



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