Fundraising by Ryan Breslow
by Parker · 93 things on Twos
- If you want to build an iconic business, fundraising will be one of your most important jobs as a CEO.
- Fundraising is a forcing function for getting better at explaining the business.
- Always remember: you are worthy. Money is plentiful these days. YOU are the scarce resource. You're the one actually building the thing!
- Self-confidence is key to fundraising.
- Avoid high-ego investors at all costs.
- The ideal is to unite confidence with kindness. Be aggressive. Have courage. Speak your truth. But also be respectful and cordial.
- Investors want a founder who is relentless, unique, positive, and kind.
- Make it clear that you’re mature and professional, which is required to attract top talent.
- Be a visionary (creative, bold, unique vision), a thinker (critical thinker, open-minded, willing to change your mind), and a warrior (you will run through walls to win)
- Authenticity is the key that unlocks everything in life.
- Fundraising is purely a matter of momentum.
- Fundraising process steps:
- Lay the soil (build a network of champions)
- Investors are most interested in introductions that come from people that already know.
- A cold introduction or cold email is basically useless.
- Plant the seeds (start casually meeting investors)
- Avoid being introduced to an investor by another investor who isn’t already invested in your company.
- The email ask should be short, sweet, and super easy for them to execute.
- Hey [Node], hope all is well! I noticed you [are connected to [Investor] on LinkedIn / raised money from [Investor]] and heard from a few folks they're pretty smart. They have relevant experience to what we're building and I'd love to get to know them. Would you mind making an introduction? Here is a quick email draft you can copy and paste. Feel free to modify as you see fit! Thank you so much. Hey [Investor], hope all is well! I have a friend, Ryan Breslow, who is building Bolt. They are doing one-click checkout for the entire online commerce landscape. Ryan is sharp, and I think you both should get to know each other. Can I make the introduction? [Node]
- Hey [Node] how well do you know X?
- When you get an introduction, don’t be over-eager, wait 24 hours. You don’t want to appear desperate; remember, you are a busy founder.
- Be kind and confident. Reply with a short, enthusiastic email.
- Hey [Investor], it's great to meet you! [Node] says amazing things. How's Wednesday at 1p or 3p ET for an intro call? Looking forward to it!
- You are the business. Investors should be investing in you as a founder at the earliest stages.
- Dialogue, not decks.
- How do you know X who introduced us?
- What do you like to invest in? What do you look for in companies? What do you look for in founders?
- What’s your fund size? What size is your average investment?
- Where do you find yourself providing the most value to your portfolio? How do you best like to help founders?
- Have a brief first meeting to have a more serious second meeting.
- Follow up immediately.
- Hey [Investor], it was great to chat just now! Looking forward to getting to know you better. [If you haven't secured a second meeting, you can also add a sentence "How's next Monday lp or Tuesday 3:30p for a deep dive?"]
- Ask about specific investments they’ve made and why they made them.
- You want to have 2-3 meetings in which investors say they’re in before moving to a full seed raise.
- Keep up the touch points. Meet up every 4-6 months weeks, share updates, talk about the market and other things outside of just your company, make introductions
- Send it (you’re fundraising)
- Tell them you’re raising 500k if you’re raising 2 million and just keep bumping it up.
- You don’t have to pick one price for the entire round.
- Investors know that those who invest early get better terms.
- Avoid getting transactional too early.
- You can tell them investors got lower caps because they invested earlier and have a slightly better cap and took a larger risk
- Use a model like Note Genie to keep track of how much of the company they’ve given away
- Tell them you’re honored and grateful. Tell them you’d like to get to know them better.
- Ask them how much they typically like to invest
- Suggest they meet your cofounder
- Ask for 3-5 references they’ve worked with. How to work with them best.
- Get references to determine the character of your investor. Demonstrate you are intentional about who you partner with. Meet other founders.
- Hi [Reference], Great to meet via email. We're in discussions with [Investor] about an investment opportunity at [MyCo], and she said you would be a good person to talk to as a reference. Do you have time for a quick (~10 min) call any time over the next few days? Please let me know when's most convenient for you. Alternatively, here's my cell phone number if you want to call whenever you have some free time: [phone]. Thanks!
- How is it to work with X? Have you gone through tough times with them? How were they during those times? Did they ever do anything that upset you? How have they helped you? Do you feel comfortable approaching them with challenges?
- Send them an email congratulations them, letting them know that your cofounder is excited, the references were stellar, and you can make room for them. Then ask for a quick five minute call.
- On the call, confirm the amount: "You mentioned your target amount is X. We can make room for Y." Pause for them to confirm.] Then say that you'll get documents ready and may want to hop on another quick call to discuss how to work together. The next day, get on a call, talk about the cadence of conversations, how they will help, and end by telling them that you're sending the documents, and reiterating your excitement to work with them.
- Send DocuSign and wire instructions that are super easy for them to execute.
- Nothing is closed until the money hits your bank account.
- The most dangerous investors are the ones who drag out the process, wasting time while ultimately saying no
- Ask investors who say no for the real reasons.
- For seed rounds, product market fit is not a requirement.
- If they say they want to invest, you have a 50% chance of closing
- No celebrating until the money hits the bank.
- Signs of bad investors: large ego, treating you with anything but the utmost respect, unsophisticated questions, extra steps, missed deadlines, unclear investment criteria, bad energy
- No board seats until you’re raising a priced round.
- Give board observer seats rather than board seats.
- Don’t give preferred board seats, only common board seats.
- Never give up a board seat in a seed round.
- Don't tag team fundraising. One person needs to be ultimately responsible.
- Excel columns: firm, target investor, last touchpoint, next step, interest level, notes on prior conversations
- Don't allow series A/B firms to invest in your seed.
- Don't tell investors who else you are talking to until they give you money.
- Fundraising is a full-time job. Plan for 3-months at a minimum.
- Raise on a SAFE and tell them your cap
- “It gives us room for X additional hires, which help us capture market share faster or launch Y product Z months faster.”
- SAFEs are flexible, allow you to close quicker, allow you to take money progressively.
- Tell attorneys you want the most founder-friendly terms possible.
- Practice your pitch to anyone who will listen.
- Pitch framework:
- Here is how the world works today
- Here is how the world should work in the future, but here's what's broken/missing
- Here's why no one has been able to solve this problem so far (potentially reference folks who have tried and failed). This is a massive opportunity. Whoever solves this problem is going to have to do X, Y, and Z, but will be rewarded heavily.
- Here's the secret (unique insight, approach, technology, invention, or some shift or change in the world) to how we're going to fix this.
- Here's why we're going to execute the best (best team ever, traction thus far if applicable, your unique experience, etc.)
- Answers to questions should educate the investor on the market as a whole and how your business will win.
- Start relationship building with investors 3-4 months in advance.
- Relationships trump metrics. You want to find, work with, and get support from investors who are there for the right reasons and who value what you're trynig to build.
- Momentum is everything. You have to drive urgency.
- Start exercising for your health.
- Start to get in the flow of a healthy diet.
- Meal prep on Sundays.
- Meals should be light and calorically restricted to keep your mind and body active.
- Add blocks to your calendar to carve out exercise time.
- Exercise helps reset the body and the mind.
- Have a weekly check-in with someone who can help rationalize and normalize the crazy process of getting rejected a lot.
- Schedule time to take breaks for at least 30 minutes every day.
- Meditate every day.
- May the force be with you.