This video explains how to build momentum in a financing round by getting your data in order, polishing your pitch deck, researching investors, and starting early. It emphasizes the importance of understanding your numbers and constantly refining your pitch deck.
What this video covers
The first thing is to get your data in order before you’re even getting out there and speaking with investors, you want to really understand your numbers; your data around the competition, maybe there are some numbers on the competition; the data on your own market, the market size, how the market is growing.
The next thing is you need to constantly be polishing your pitch deck. A pitch deck is never a final and complete document. It’s always a work in progress.
The next thing is, you want to know the investor. Obviously, at the beginning when you haven’t had that much of an exchange, one of the tactics that you can use is you can go out to founders that have already received an investment from that specific investor and not only use those to receive an introduction but also use those founders to ask them how the investor is. Maybe there are certain stories that they can share with you.
The next thing is, you want to start early. The biggest mistake that I find founders making is that they wait until the sixth-month mark when they are about to run out of money, and then they go out and try to find the investors.
The next thing is taking commitments. There are going to be investors that are not going to be lead investors. Maybe it’s not that person or institution that’s coming in; it’s pricing the round for everyone else to come.
Then, you want to start low and go high. What this means is rather than, for example, if you need to raise $5 million, and you’re not sure if you’re going to be able to raise the $5 million, then you go for that amount that you know for sure, from the relationship that you already have, that they’re going to come in and they’re going to invest in the business.
Another great method to build momentum is to offer discounts. What this means is that if you see an investor that could be a very well-regarded investor or a popular investor, and perhaps send a very positive signal to the market, one thing that you could do is offer them a convertible note with a certain amount of discount and interest on their investment if they were to help you in structuring the equity round later on.
Next, you want to carefully use that moment when you announce who your lead investor is meaning who that investor that is coming in and investing 20% or more of your financing round because that is going to send a super powerful message to the market if it’s a well-regarded investor, or it may scare investors out if perhaps that investor is someone that people are not that familiar with. Here, you want to not treat this lightly.
You also want to pack in the meetings. The last thing that you want is to have the emails, the communication all over the place. This is like a sales process. It’s on that sales final that you have created; you have different stages that you’re going to pass those investors from A all the way to Z.
Then, remember: you want to really send powerful updates. Fundraising is not about that first meeting that you have where you’re pitching them because you’re never going to receive a check on that first day. You need to follow-up as time goes on, every couple of weeks until you have that lead investor that is pushing everyone over the edge.
The last thing is, you could use a countdown. But the countdown, you want to be very careful how you use it. Never use a countdown unless you have over 20% of the round already covered, meaning 20% of that round that you know for sure is going to come to your bank account.
This is when you have a lead investor. This happens when you reach out to all the other people that you have been in communication with after having your lead investor, and you tell them that the round is going to be closing by x-date and that either they’re in or they’re out. At that point, you’re pushing them over the edge. If that doesn’t do it, then they’re not a good investor in any case.
