Category: venture-capital

Over the past five years, I’ve asked more than 250 founders, investors, and advisors from around the world to share their fundraising stories so emerging founders can learn from their experiences. Whether you’re looking for tips on targeting investors, advice for nailing your pitch, or hacks for running a solid round, I’ve likely talked to a founder who has been in your shoes.

Here are a few of the most valuable pieces of fundraising advice I came across in the past 12 months.

Steer clear of the one-size-fits-all fundraising process

Consider crowdfunding

When
Mike Bell faced a down round (a lower valuation than the previous round) for Miso Robotics’ Series C, he turned to crowdfunding. Miso raised $60 million across its Series C, D, and E rounds from crowdfunding alone, which Bell says is the ideal path for the right startup. “You need to be able to tell the story really simply and really clearly,” he says. “And it needs to resonate with people.”

Find the “super founders”

When seeking early investors for his startup
Captain, Demetrius Gray went after founders who had raised at least $50 million or exited at over $100 million. These experienced entrepreneurs offered Demetrius valuable feedback, and they advocated for him among peers and investors. “With that endorsement, it’s going to continue to open doors,” he says. “If you need an introduction to a VC, it just becomes easier by virtue of having previous founders on your cap table.”

Ask for an introduction

“Enlisting investors to help us think about how to build a company that is fundable and potentially viable—I couldn’t recommend it more,” says
Astrid Atkinson of cleantech startup Camus Energy.

Knowing she was building tech for a notoriously difficult customer segment, Astrid leaned on her network for warm introductions to knowledgeable investors. Then she started conversations about what a viable company would look like, digging into details of the business model and go-to-market strategy. Some of those conversations turned into checks for Camus Energy’s friends and family and Series A rounds.

The more the merrier—invite everyone to your party round

After raising traditional rounds with previous startups, seasoned entrepreneur
Richard White chose to optimize his fundraising by welcoming as many investors as possible. His Zoom app, Fathom, boasts more than 90 investors, including top VC funds like Maven Ventures and Character.vc, as well as the founders and CEOs of Reddit, Twitch, and Cruise.

“I would love to have thousands of small investors,” he says. “It’s the person who writes three checks a year—doesn’t matter the amount—out of their own piggy bank who is going to care much more about your outcome than some big VC where [your funding] is one of 10 checks they’re going to write this quarter.”

Send cold emails

Plenty of fundraising advice focuses on networking—and for good reason. But founder
Michael Bamberger instead found success almost entirely through cold outreach, raising $7 million for software startup Tetra Insights. When warm intros weren’t working, he doubled down on research to target the best-fit investors, then cold-emailed his first batch of five funds, one of which became his lead investor. “When I changed my criteria to finding people who were a fit,” he says, “the process was really quick.”

Provide value and build relationships

Scott Kitun, host of the
Technori podcast and co-founder of bespoke song platform Songfinch, is an expert at playing the long game. He leveraged the relationships he forged running a valuable podcast to raise the first $1 million for Technori in 2018 and to fill a full slate of pitch meetings for Songfinch’s Series A. As he considered an exit for Technori, he built a lucrative newsletter and readership—an ideal fit for acquiring company KingsCrowd.

He advises founders to work toward creating value, even before launching a startup: “I would start focusing my attention on building one single asset, [one] you know your [potential] acquirers desperately need.”

Bottom line: Not every startup is destined for the traditional fundraising process. Know what your company needs and don’t hesitate to go after it.

Level up your pitch meetings

Let investors know what to expect

Frame your meeting as you go, says serial entrepreneur
Iddo Tal, whose live online course Raise the Round teaches investors his step-by-step method for fundraising success. Telling investors what they can expect from the meeting upfront—one of the steps in his seven-step method for meetings that close deals—demonstrates your organization and preparation, and the effect on investors is immediate.

“I see their shoulders relax,” he says. “They know they have five minutes that they need to be quiet, and after … [it’s] their show to ask questions.”

Give investors a chance to breathe

Demetrius Gray of Captain also found success in acknowledging the taxing schedule of back-to-back pitches that investors often face. He uses this quick script to provide everyone a moment to pause before returning focus to the pitch: “Hey, I understand that you’ve had a busy day. I can’t imagine how many meetings you’ve had so far. I’ll give you 30 seconds to just take a breath. And then I’ll start.”

Stay on task

Investors’ packed schedules often mean founders have very narrow windows of opportunity in which to communicate their messages.
Eitan Reisel, founder of gaming fund vgames, advises keeping your pitch deck short and sweet. “In two seconds, I need to understand what you’re about,” he says. “Tell the story with no more than eight slides: who you are as founders, what you’re building and what the vision is.”

Eva Dobrzanska of startup consulting firm True Altitude echoes this advice, pointing out that a pitch deck is not a sales deck. She advises against going into great detail about products or tech in your pitch deck. “I want to know what the product is, but then show me the results,” she says. “Show me the traction. Show me your go-to-market. Show me where the people interested in that product are.”

Bottom line: Run a kickass meeting by setting up expectations and maintaining a laser focus on what’s most important to investors.

Identify your champions

Employees

Your startup’s success is a function of how good your team is, says
Biju Ashokan, founder of the Radius Agent platform for real estate agents. When it comes to hiring, he looks for people who have previously worked on a successful project—and it doesn’t necessarily need to be at a startup. “If they’ve seen growth and witnessed growth, they know what works and what doesn’t work,” he says. “Ask them really challenging questions. Make it look like your company is going to be a lot of hard work and see how they react to those questions.”

Partners

For
Kindred cofounders Justine Palefsky and Tas Amina, a significant part of laying the groundwork for their home-swapping membership platform was engaging in serious “founder dating” by diving into difficult conversations upfront and understanding what each founder brings to the table. “Over time, that’s resulted in us seeing around a lot of corners,” Tas says. “The amount of trust that we have in each other allows us to split problems and run with them.”

Don’t try to go it alone. The startup journey is not an easy one, so finding the right partners to walk alongside you can make all the difference. “You have to play whatever cards you get dealt. But whenever possible, find people to join up with,” says Fathom’s Richard White. “That’s sometimes the hardest thing to do. I struggled for a long time with being the lone wolf in the woods, and you can’t really get as much done that way.”

Investors

Find the “true believers” in your network. Strong connections with investors can give you a huge head start, whether you’re raising capital for your startup or raising your own VC fund. But, as
John Zeratsky discovered when looking for limited partners for his fund Character.vc, even the best connections must understand the value of the business model before they’ll write a check. “We had to understand the landscape of limited partners who invest in venture and figure out who was looking for this kind of exposure, versus the ones just taking a meeting because we know them,” John says.

Bottom line: Surround yourself with people who believe in your vision and will help elevate your company to success.

A strong foundation makes for successful fundraising

From key hires to finances to detailed documentation,
Mountside Ventures founder Jonathan Hollis recommends a long checklist for founders preparing to fundraise. Near the top of that list? A robust financial model that includes thoughtful growth projections for multiple future scenarios, which is a critical element in addressing investors’ potential concerns.

“As an investor, I can [look at the assumptions and see] what happens if my growth doesn’t double year-on-year,” he says. Prospective investors can also forecast “what happens if it takes six months instead of three months for my new sales hires to [become] productive and bring in new customers, what happens if my customer numbers fall.”

If a strategy is good for fundraising, it’s good for building a great company, says
Jason Yeh of Adamant Ventures. The experienced entrepreneur and investor creates content to support and educate founders about their most difficult challenges, including fundraising.

He says founders should stop thinking of fundraising preparation as separate from growing their companies: “I believe the best fundraising is demonstrating that you are a great company and that you’re worth betting on, and then doing everything you can to have investors discover that.”

Make sure your hard work is reflected in your outreach. For fund manager
Paige Finn Doherty of Behind Genius Ventures, a well-positioned cold email can help a startup stand out. That’s especially important when only 0.5 to 1% of those that contact her fund get a check. “Get really clear [about]that problem,” she says. “Why are you uniquely positioned to solve it? What steps have you taken to validate that the problem is a really large one, and that people are willing to pay?”

Bottom line: Invest time and effort in building a strong startup—the return will be worthwhile.