Fundraising is a game of strategy and psychology, similar to poker, requiring a long sales cycle. Building relationships and trust with investors early in the process is crucial, as investors rarely write checks on day one.
What this video covers
Start-up fundraising is a game. It’s like poker. It combines strategy, it combines psychology, and it’s a long sales cycle. It could be shorter in some instances if you know the process and the methodology, but ultimately, it can be long.
You want to start early in the process because it’s all about building relationships. It’s all about trust, and ultimately, trust is built on integrity. What that is, is you being able to deliver on your promise. It’s never going to happen where you meet with an investor on day one, and right away, they give you a check. It just doesn’t happen.
At that point, you go out, you start talking with people, and always think about that when you go, and you’re in fundraising mode, never go for money because as the saying goes: If you go for money, you’re going to get advice.
When you’re fundraising, remember that it’s all about trying to create that storm so that the investor constantly keeps hearing about you, whether it’s from people, whether it’s from the press, but they need to always keep you top-of-mind because that’s when everything clicks for them, and they’re going to be like, “It’s time to make an investment. I know these guys.
You need to keep your fundraising efforts and the timeline to a minimum. Typically, those rounds of financing, especially for startups, they’re going to be anywhere between three to six months. If it’s taking you more than six months, there’s something wrong; there’s something off, and at that point, you need to put an end to the fundraising.
If it’s past three months, and you’re going back to an investor, and they see that you have not been able to raise your round, they’re going to think that everyone has rejected you, and that’s the reason why you’re going back to them because your opportunity is not that exciting. So, be careful with the timing, and always put yourself in that three-to-six-month timeframe – no more, no less.
Start with a very interesting committed capital. It needs to be a good amount. For example, when you’re finally activating the round, and you’ve got your lead investor, and now you’re announcing that the round is forming, the round has started, and that you’re raising the money, you want to have at least 20% of the round covered by that lead investor. Anything under 20% may be a bit tricky.
When you go out to people, and you say, “I’m raising money, and I’m in the middle of it,” they’re going to first ask you how much money you have committed for this round and who has committed that amount of money. That is going to be the social proof.
Make sure that you are mastering storytelling. Storytelling is what’s going to give future possibilities. It’s all about packaging and positioning, whether it is the narrative that you’re using for your introductory meetings, where you’re really nailing it on the Why, What, and How.
The Why: How you started with the business, what pushed you over the edge to bring it to life.
The What: How is the market? What is the timing? Why now? How much is growing? What’s the market size? What’s the compounding annual growth rate?
The How: What have you done today? What are some of the accomplishments? Who is behind it? Why do you have the right team executing in the right seats?
That’s for the introductory meeting – the Why, What, and How. For the pitch deck, you want to make sure that you have a very compelling presentation that is between 15 to 25 slides – no less, no more. You can actually use the pitch deck template below that founders are using all over the world to raise millions. You don’t need to start from zero. Create something like what we have that would really help you.
On your timeline and on your strategy, you need to create a strategic roadmap that is going to include the follow-ups.
The follow-up is something that you want to time. If you are, for example, engaging with 50 investors, try to make sure that you have them all on the same face on that sales cycle because it’s ultimately a sales cycle.
