There’s no way around it: securing your first round of funding is challenging. It’s an especially tough task to convince a group of investors to believe in your company vision and hand over their money to support it.
The truth is that much of your fundraising success will depend on your timing, competitive interests, and good old-fashioned tenacity. However, there are also smart strategies that you can incorporate to increase your chance of success.
Check out these four tips before you kick off your first raise.
Do Your Research
Before you begin reaching out to potential investors, you need to understand what they’re looking for in an investment.
Importantly, your business should fit within their venture criteria. This will vary depending on the specific interests of the firm or investor, but your company should align with the way they invest.
For example, certain firms only provide capital for companies in certain industries, specific regions, with certain monthly or yearly revenue, and/or during certain funding stages. If you’re outside of their investment scope, don’t waste your time or theirs by pitching your company.
When you’ve successfully secured a meeting with a potential investor, you’ll need to be prepared to answer in-depth questions about your business. Investors will try to gauge the level of risk associated with funding your company, so they’ll dig deep into questions around your:
- Management team
- Go-to-market strategy
The pitch deck that you present to investors should include all of these details. But VCs tend to prefer brevity in these decks, so you’ll need to get creative in how you incorporate the essential information.
If you’re feeling stuck, take a look at some of these examples from Piktochart to get inspired.
Get Warm Introductions
Just like getting a job or selling a product, the best way in with investors is by getting a personal introduction from someone already in their network. VCs are constantly inundated with funding pitches, so they prefer warm intros from people they trust to help them validate the opportunity. (If you’d like to hear more from the investors themselves about what’s important to them, check out the explanations from Blackbird VC and Passion Capital.)
To get an introduction, reach out to other entrepreneurs in your network who have raised funding. Ask about their experience and what worked in their efforts. If you don’t have any founders in your network, try attending meetup groups for startups in your area. Often, founders and investors alike will visit these types of events, and you can start building relationships with them.
During the fundraising process, you’ll speak with many different people. Keep your outreach organized so you don’t mix up a firm with one of their competitors or mistakenly email an investor after they’ve passed on your opportunity.
Here are some tools to keep you organized:
- Google Sheets or your CRM. Keep tabs on the status of your communication with individual contacts or companies, including the dates of your outreach, contact information, and notes about your conversations.
- Trello. Use a collaborative productivity tool like Trello to get visibility into goals and deadlines for certain aspects of the fundraising process.
- Zoom. Many of your initial meetings may not be in person, so get a subscription to a video conferencing platform like Zoom to make the experience more personal.
Raising funding can be a lengthy process, so don’t get discouraged if you feel like you’re facing frequent rejection. With these tips, you’ll help your company to stand out and acquire your first round of funding.