How to increase your chances to secure startup funding in the US?

Hi, my name is Katya Dorozhkina and I run the New York-based Starta Accelerator. We mostly work with Eastern European startups: Batch 6 of the program includes 23 companies from Estonia, Belarus, Ukraine, Slovakia, Georgia, Moldova, Poland, and Russia. We currently have 80+ companies in our portfolio, with 20% of them being in post-revenue.

In September, we announced applications for Batch 7. So, I decided to share some tips and answers to questions about fundraising that we are most often asked about by companies founded by European immigrants coming to the US.

An investor or an accelerator? What is an accelerator?

According to Entrepreneur magazine, there are more than two hundred accelerators in the US, each with their own focus, history, and specialization.

As a rule, an acceleration program lasts for approximately four months. It includes training, workshops, and individual sessions with mentors. These mentors are people who are experienced American entrepreneurs, investors, and local professionals.

Essentially, startup founders get practical lessons on effective networking and cultural adaptation in the US. The intensive program takes place in the US, so remote options are not currently possible. It is also unsuitable for people with an intermediate (or less than) understanding of the English language, because all communication is in English. You just can’t benefit from the program at its maximum without these stipulations.

An accelerator is a good fit for your project if it is on the seed-financing stage, and you already have a working prototype that has garnered some amount of sales. This is because sales always mean that customers need your product and that a product-market fit exists. So, if you do not have a product or sales, then applying to accelerators will be a waste of your time. The same can be said for trying to attract investors.

However, you can always ask others for money. Remember the three F’s: friends, families, fools.

A venture investor is the next big step after an accelerator. You created demand for your product, started getting bigger sales, and now you need the money to scale up your business, which is already operating in the US market. You understand why you need the money and can explain it to a potential investor.

How to reach an investor?

Forget about ready-to-use investor databases, do not send out bulk emails to 100+ e-mail addresses. Every venture fund has its own unique investment focus — industries, countries, and stages of development are all factors that may prove important when reaching out to investors.

Most venture funds have websites where they announce their preferences and share other useful information regarding their fund and motives. Take your time to figure out if your goals align with the goals of the venture capitalists before approaching them. Do not send an email to an investor who specializes in VR / AR or biotechnology if you are trying to fund a mobile app for young moms. It’s a waste of everyone’s time and typically doesn’t look good.

In the US, there are different services to help you find the right investor. Two main assets, of course, consist of both CrunchBase and LinkedIn.

For example, to search for a relevant investor on CrunchBase: enter the name of your competitor into the search box, go to the company’s profile, make a list of the funds and angel investors who invested in them, and done!

You can also enter your market niche in the search box, but make sure to know exactly how your class of products or services is classified in the US. To figure that out, you can use Google Translate, and then check to see if there is such a class of products on CrunchBase.

Look for a warm “intro”

Investors get flooded with investment opportunities constantly, so your best bet to get your foot in the door is by getting a warm introduction through someone the investor knows and respects. “Intro” — remember this word :)

What to know about investors and what to consider when writing a cold letter?

It all comes down to research: know the specialization of the investor, whether they invest in the early stages of development or focus more on mature companies. In general, it’s good to know what distinguishes a seed-round and a Series A round, as well.

Secondly, do not ask to sign an NDA. Ideas are cheap — execution is expensive. Investors get inundated with pitches every single day, they are not interested in stealing anyone’s ideas.

Do not ask for money in the first sentence. The best way to attract an investor is to get them interested in your idea. Your letter has the best chance to get a response back if you are asking for feedback from an investor who is already actively investing in projects in your niche. We already covered how to find those investors using CrunchBase above.

Use Fiverr to hire a native English proofreader. Have them check all the correspondence with the investor. Yes, i’s true that the US is a country of immigrants: accents are tolerated in bars or casual subway conversations, but if you cannot competently correspond in business emails, how will you sell your service? This is not only a valid question on its own, but a reasonable one an investor might ask, as well.

How to choose the best events for meeting investors? Is there a rule to determine how valuable the event will be?

In the US, there are tons of websites that can help you find the most suitable events for you. Plan ahead, because good conferences sell out months in advance. For example, the SVOD conference starts accepting startup applications in October of the previous year for their event in May.

If your focus is to find an investor, look into events such as SVOD, TCDisrupt, and frequent meetups organized by accelerators. For example, Starta Accelerator often invites investors to the Sputnik Space in New York.

What are the most frequent mistakes in a pitch deck? What do you advise projects to do / not to do?

Your presentation needs an “Offer to an investor” slide that spells out what you want and on what terms. Make sure to have a “Contacts” slide, so investors know how to reach out to you.

Only use data on the market that is relevant to where, and how, you plan to conduct business. It is a mistake to present information on the market of SAAS-commercial products in general if you are making a SAAS-service specifically for accountants. It also does not make sense to use data on the market in Europe, if your focus is the US.

Your pitch deck is your key to securing funds for your startup, so take some time to make it look awesome. Play with different formatting, make sure you stick to one font on every slide, hire editors to get rid of all mistakes, and keep your presentation concise (no more than 12 slides). If you need to include any additional information to your pitch deck, create an Appendix rather than dragging your presentation out for too long.