Fundraising is a crucial moment in the life of a startup. It’s an opportunity for founders to secure the capital necessary to fuel their growth and turn their vision into reality. However, navigating the fundraising process can be challenging.
At QVentures, we have had the pleasure of meeting thousands of founders both at the pre-seed and later stages. Over this time, we have observed some best practices that founders consistently do well during their fundraising journey.
Be a Good Salesperson
One of the most essential skills for founders during a fundraise is the ability to sell their vision effectively. It’s not just about pitching your business; it’s about telling a compelling story that resonates with investors. Investors should be able to instantly connect with and understand the values and journey of a company.
Being a good salesperson is crucial as it determines whether you can convince investors that your idea is an idea worth backing. It also signals that this person is able to deliver their narrative to make the right hires, master their sales process and when the time comes, get a premium on the company when it sells..
Investor Relationship Building
As every good salesperson knows, selling begins before the customer even realises what they want to buy. A good salesperson must understand the customer’s needs and build a rapport. While this may look slightly different in the VC world, the underlying message is the same, start early and build relationships.
While it may seem surprising that the best founders have time to stay in touch with their network of investors. The reality is the contrary, we have found the strongest founders have been the people who take time out of their day to take a 15 or 20-minute call or write an update email to their network.
What this means is that it not only builds rapport but also is a chance for founders to showcase how they execute the KPIs they set out to achieve. Therefore, taking out a bit of time now can pay back manyfold when it comes time to fundraise.
This also extends to current investors, as regular commercial updates signal a strong responsibility to shareholders and give them more confidence to believe in your vision. This is a good Y Combinator investor update template you can use for existing investors.
Having a Strong Data Room
Founders who excel at fundraising understand the importance of a well-organised data room. This includes having all the necessary financial, legal, and operational documents readily available for due diligence. It reflects a founder’s commitment to transparency and professionalism and means momentum does not slow down as you find yourself having to take a few days (or weeks!) to put together a myriad of documents.
You can find Creandum’s Data Room Template here.
Involving the Wider Team During Fundraising
While it is important that the founder is a large part of the fundraising discussion, successful founders recognise the importance of involving the wider team. The ability of different team members to talk confidently about their roles offers insight into the business’s strategic alignment across the business’s functions. The ability to do so successfully can be a huge asset and boost to the company’s fundraising efforts.
This could include bringing in the CFO to talk more succinctly about the financial performance and objectives of the business, or The Head of Sales who can present the status of the current sales pipeline and how and why the current fundraise will help them get to new heights. The degree that these assumptions are backed by realistic and measurable goals and the ability to speak with conviction can be a game changer to the fundraising process.
Not Having an Unnecessarily Long Pitch Deck
Last but not least, is having a pitch deck that covers these main areas:
- This is what we do
- This is the problem and SIZE of the problem — how significant is it?
- This is the current process of solving this problem
- This is OUR approach and why we believe it is needed
- This is how we intend to do it — our current sales strategy
- Our current traction and projections
- This is how big the market can be
- Why we are the right people to build this solution
- Our ASK and where it will take us
Being intentional about each piece of information you put in your deck is important, and when faced with adding in additional information ask yourself, “Does this add value to why my idea is worth backing?” There is nothing worse than having a lengthy 30-page pitch deck that still leaves the reader confused about what you are building or your value proposition. We recommend an initial deck no longer than 11 slides.
To Sum
The fundraising journey is both an art and a science. While there is no one-size-fits-all approach, these are the best practices we have observed that have made fundraising significantly easier and removed as much friction as possible so the founder can focus less on fundraising and more on running the business.
We’d love to hear any other ideas or tips you have found that have made a difference. If you or anyone you know is fundraising or looking for Venture Debt, please share this article and get in touch, we would love to hear from you.
At QVentures we are actively working with businesses in this tech space and are always on the lookout for exciting start-ups that we can support in accessing the capital they need to reach their goals.
