How to conquer the modern fundraising mentality for your next round
We’ve heard it time and time before…
“I need to wait until my pitch deck is done”
“The product still needs improvement”
“I’m just not ready yet”
It’s a fact, people are procrastinators. We just simply leave the hardest stuff for last. It’s like there is a brick wall in front of us and we cannot commit our time and energy, until it’s all teetering on the brink of disaster. (I must say, this doesn’t happen to everyone but it is a common trait of highly creative people.)
The same goes for entrepreneurs when planning growth strategy, they tend to see how things go, and not start thinking about investment until money is running out. When this time comes, innovation comes directly to a halt. Days become centred around who knows who and what paperwork needs to be ready. And sometimes it can go on like this for six to eight months!
I’m amazed that this is still how the majority of the industry is run, and yet few people are approaching this problem head on.
Entrepreneurs are extrasensory prophets, people who can see farther, wider and clearer. And they should be allowed to spend all their time and energy on strictly making.
So let’s get back thinking about the problem at hand; founders need to get funded faster and easier. And when you start looking at these two situations together, a few solutions begin to arise.
1. Tell your story from Day One
If you want to pique an interest from an investor, the best thing to do is to bring them on the journey from day one. It can be as simple as a few words in a casual presentation of your idea, your team, and your mission and vision. It’s a way of opening the conversation to them, letting them know what you have gone through, and how you envision the future.
Some well known industry folk have written that it is a ‘bad time’ to start fundraising when you are not ready, but that is because they are viewing this as a monumental task. Don’t even think about it like ‘fundraising’ as you know it. Maybe you are still working on your business model, or solidifying your value creation for your customer, but the truth is — these things are constantly evolving, and are never truly done! If you want to continue to stay competitive in the market — you need to keep innovating everyday, and a good investor should understand this. One of the most valuable traits in a founding team is resilience.
The best way to get in front of investors these days is by building online presence. Hang out where other startups hang out online. There are a host of Apps & high information diet databases like Product Hunt (They have a great new tool — Ship), Crunchbase, Dealroom, AngelList, and Fundsup. At this point in time, don’t even start mentioning how much you are looking to raise yet. Do this at minimum a year before you need to start closing a deal.
Welcome to the ‘flirting stage’.
2. No one likes a needy date
That’s a great segue way into my point. Finding an investor is very similar to finding a partner, two parties sharing a similar vision of the world and embarking on a journey together that could last.
Think about it like going on the first date. When you walk into an office of your next potential investor — the last thing you want to do is emit the kind of needy energy that you are about to rip the money straight out of their pocket. And the more you think about it — the more salesy your pitch starts getting. The other person can usually immediately tell how desperate you are and all of a sudden… you become repulsively unattractive. You’d be surprised how much information we can understand from each other without even saying anything.
Chances are, your next investor is going to be someone you have zero relationship with, and this kind of trust takes a long time to build. Begin by thinking about the type of person who will add VALUE to your business — not just money. After narrowing down a list of potentials, invite them for an informal meeting to present quarterly updates on your core metrics. If they won’t commit to that, an informal email newsletter will do. This will build history, transparency, which ultimately leads to the thing you want most — trust.
3. Let the technology work for you
The past few years have been all about — automation, automation, automation. I once overheard another Founder say in a co-working space….
‘Isn’t there a smart tool that hunts through my connections and find potential investment partners with relevant industry experience?’
Data driven investing is on the rise. VC’s are finding smarter ways to access and analyse company data, however it is not centralised yet.
Abrar Akhtar, our Head of Product, has been meeting early stage investors to discuss what metrics and features they would like to track from startups over the last year. These conversations have planted seeds in investor’s minds, reflected in Dominik Vacikar’s recent post on HackerNoon on the potential utopia.
“What we need in order to build a truly Algorithmic VC ecosystem, is a similar plugin that all startups can simply implement into their website or app. In exchange, they will get an overview of how well they are doing compared to their peers. Their data will be kept private/anonymous on one central platform or exchange, where investors can request to get in touch (purely based on performance data).”
As he mentioned, there are a few players who are working in this space you can check out, but no one really mastering it. Companies like FollowTheSeed or SocialCapital.
Of course, these are the things we are thinking about everyday at Fundsup. A combination of cleverly automated storytelling, performance reporting, and targeted relationship management — while making the whole experience in lightweight, easy to use, and in your pocket.
Stay tuned for our next major release in early September 2018.
To summarise, I hope you stay confident above all things. I’m a firm believer in how thoughts can dictate actions. At the end of the day, you are negotiating the value of your unparalleled creative genius.
And even a machine can’t replace that… yet.
