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Fundraising: Summary

Fundraising: Summary

by Joe · 87 things on Twos

Embody these features: visionary, thinker, and warrior.
Always remember: you are worthy. Money is plentiful these days. You are the scarce resource.
Uniqueness is essential. Investors meet with hundreds, so you need to stand out.
Three steps to fundraise around momentum:
Lay the soil (build a network of champions, otherwise known as networking and relationships)
Hosting gatherings for founders and investors is a great way to get this done
Plant the seeds (start casually meeting investors)
While you're ready to meet investors, you're still not raising! You have a very short window of time to complete each round - the longer it drags out, the less momentum you have.
When you have investors consistently forward-leaning after relationship building then you're ready
Send it (you're fundraising!)
Example email:
Leverage the strongest introductions in your network
Wait 24 hours after getting the intro - if they don't follow up within 24 hours, then you can reach out to keep the momentum
Once the intro has landed, this is the email to be sent...
Hey [Investor], it's great to meet you!
Looking forward to it!
[Node] says amazing things. How's Wednesday at 1pm or 3pm ET for an intro call?
Dialogue > Decks
Don't send prior to the meeting, send bullet points.
Remember, you're still not fundraising. But you can hint that you are in the near future.
Keep the meeting to 30 minutes, no more. Remember - you're a busy founder too.
The goal of the first meeting is to establish a longer, second meeting.
Literally the first thing I do after the meeting is send a SUPER short 1-2 sentence follow up
Hey [Investor], it was great to chat just now! Looking forward to getting to know you better.
This is where you insert more times if you did not already plan it.
The second meeting is where the product demo is best
There are a couple ways the second meeting can come to and end,
In this case put them in the "reach back out when investing" list
They say it was great chatting but don't make any motions to invest
By the end of the meeting, they explicitly say they want to invest
Investor: "I'd like to invest. Are you currently fundraising?"
We're in a fortunate situation. We only planned on raising $3M and took a step back after raising $2M because we had X business objective to tackle. Also we really want to get to know people before taking their money. So, in summary, yes, we could take more money from the right high-value investors, but we're in no rush and being way more deliberate"
When you're ready to "Send it!" you should reach back out with a major company milestone and the news that you are indeed, now raising.
Suggest they should meet your co-founder or someone else on your team
Use a model like Note Genie to keep track of how much of your company you have given away. NoteGenie.com
When they explicitly say they want to invest, make sure to tell them you are honored.
Ask for references! The framing is not vetting the investor but learning "how to work with them best"
Nothing is closed until the money hits your account.
A bad investor will completely ruin your business
Do not let a firm's brand reputation be the only thing you consider when making your decision
I always recommend a board observer seat over a board seat
"I only gave up one preferred board seat in my series B"
As an alternative, try to give them a common board seat that you control as compared to a preferred board seat they control. Preferred board seats are a literal marriage you can not get a divorce from until you go public.
"NEVER give up a board seat in a seed round"
Common board seats are responsible for the common shares of the company, of which you are the majority shareholder.
Only one co-founder should be leading fundraising
The other co-founder should focus on keeping the business running and leveraged in a supporting role.
Target Investor
Firm
Make an excel tracker with the following columns
Last touchpoint
Next step
Interest level
This tool will follow you along for subsequent rounds as well
Notes on prior conversations
Where did they light up, where did they have concerns, etc.
Series A/B firms will want to talk to you early to get a look but don't get too excited. As a matter of fact, I would avoid these conversations entirely.
Revealing you are fundraising too early is another all-too-common pitfall.
Always defer back to relationship building process
Keep you answer on terms short, sweet, and simple.
Make sure you know every term in your documents.
There are tons of answers to what you are raising capital for. I often like to tie in momentum "This thing happened sooner than we thought and we need to scale faster than we had originally planned"
Lean on, but don't fully trust, your attorneys. Tell them you want the most founder-friendly terms but even with that directive, it's not guaranteed.
They'll tell you things are standard but that's usually BS
The pitch is your most effective fundraising tool.
The best way to have an amazing pitch is to know your stuff.
The market
The history of the industry and it's players
The most important pitch isn't the polished one, it's a casual one.
Why the world needs your company, why it hasn't existed thus far, and why you will be able to pull it off.
Your customer
Lock yourself in a room and don't come out until you're bulletproof.
The Perfect Pitch
Your goal in relationship building is...
Have a bunch of investors who are warm
Get close enough with 1-3 investors who you know you will get to terms with
For series A rounds, it is really important to get a term sheet quickly after the process begins
You can only negotiate if you have other term sheets in hand
Don't forget...
Relationships trump metrics
Momentum is everything
You have to create a compelling moment that will drive the urgency when the opportunity arises
Before you start fundraising spend considerable time on your health because it can be a grueling process
There is nothing in this world that I believe in more than meditation
Accelerators surely offer benefits, but the primary draw is usually assistance in raising capital.
The most important facet of fundraising is unflinching authenticity
Above all, believe in yourself and your company. If you have made it this far, you have something special, and if you play your cards right, investors will be lining up to join you.