What's the key to raising capital for your startup? Simply put: momentum.
In my 20+ years of working to connect founders with potential investors, I’ve learned that there’s a direct correlation between the speed of your fundraising process and the probability of actually getting funded.
Angel investors and VCs are very smart people who eat, sleep and breathe these kinds of investments — it’s what makes them successful. And the best investors are pros at sensing whether a deal has momentum or not — or worse, whether a deal has gone stale.
When you’re raising venture capital for your startup, you will have to hustle like you’ve never hustled before. As CEO, your core job is to build and then maintain momentum for your investment deals.
Once you have set up and organized your fundraising funnel and filled it with 150+ well-qualified target investors, then it’s go time.
Check out these hustle tips for creating momentum in your next fundraising round:
#1 hack for asking for email introductions
Asking for introductions to your target investors is one of the best places to concentrate your efforts at the beginning of a round. If done well, these email intros can get the ball rolling quickly.
Pro tip: make it as easy as possible for your connector to do their job.
Before you send your first email, be sure to do your homework in mapping out mutual connections between you and your target investors. You may find that you have some “power connectors” in your network — people who are already in touch with several of your targets. Put these people at the top of your list.
Reach out to your connector with a brief email that says, Hey, I’m raising money and I see you’re connected to these investors on my target list. Do you know them well enough to make an intro?
After your connector responds with a list of introductions they’re willing to make, here’s the best way to help them help you:
- Start a clean email thread to your connector — one for each target investor.
- Write a clear subject line: “[Connector], can you intro me to [target investor]?”
- At the end of the subject line, include at-a-glance info about your company: company name, the funding round + the single most exciting data point about your business
- Keep the email body VERY SHORT! Investors get dozens of these emails a day, so keep yours to 4-5 sentences.
+Use one sentence to say what your company does and link to your website.
+Reiterate that you’re fundraising, and ask for the intro.
+Mention any connections you may have with the investor (Universities, past employers, etc.)
5. Link to a teaser pitch deck. This will be much shorter than your full deck and should include five slides:
+The problem your company solves
+How your company solves it
+Market information
+Traction thus far
+Your team
Example of an investor introduction email:
Now all your connector has to do is forward this streamlined, informative email, and your target investor has all of the information they need to decide whether they want to take a meeting.
As you’re building momentum, go for what I call a blitzkrieg approach to introductions — send as many as you can at the same time instead of waiting for replies from each one.
Before you know it, investors will be moving through your fundraising pipeline at a healthy pace.
5 hustle tips for maintaining momentum
An investor’s natural inclination is to watch and wait, to see whether a deal is worth investing in before they put their money on the line.
This means that it’s incredibly important to build some triggers into your process that speak to an investor’s FOMO and let them know that they had better pay attention because your deal is going places.
1. Prepare for momentum-probing questions
A common question you may hear at the end of your pitch meeting is, “So how is the round coming together?” This is an investor’s way of feeling out a deal’s momentum, and your answer should signal investor interest, the professionalism of your process, and a tight timeline.
For example: “We just started our fundraise. I've got 12 meetings this week and 14 set up next week. We're running a pretty efficient process, and I'm hoping to close this out by the middle of March.”
2. Put your pitch deck to work for you
Your pitch deck is a living, breathing document that you continually refine over time. If your go-to-market slide gets raised eyebrows at a couple of meetings, then it’s time to try a different tact.
By the time I closed the seed round for Foundersuite, I was using version 42 of our pitch deck, and I would tweak it after every few investor meetings.
If you’re bringing a co-founder to these meetings, ask them to take notes on every question an investor asks, then create an appendix slide for every answer.
Use a pitch deck hosting tool (like the one within Foundersuite.com) that will tell you whether a target investor has opened your deck and how much time they’ve spent with it. This is crucial for knowing how to approach a meeting — whether you’re going in cold or talking to an investor already familiar with your work — and for understanding which investors are most interested.
3. Send out investor updates
Great investor updates are the secret weapon in your fundraising toolbox. It’s ideal to start the process a few months before you begin raising, but it’s never too late to start sending concise, informative updates to a broad list of target investors and supporters.
Send a cold email to some of your top investors, offering to add them to your list for a sneak peek at what the company is doing — this is a hard offer for any investor to refuse.
Be consistent. Include your top metrics, share what you’re doing in the month ahead and what you achieved in the last month. You’ll create a virtuous cycle of communication, execution, and success that shows investors you have what it takes to lead your company to the next level.
🔥 Take a deeper dive: creating effective investor updates.
4. Show up everywhere your investors look
Consider running retargeting ads on Facebook or LinkedIn. Upload the email addresses from your fundraising funnel and use them to deliver brand awareness ads about your company. (Stay away from ads specific to your deal, as these are usually prohibited by ad platforms or FINRA regulations.)
If you’ve already mined LinkedIn for mutual connections, try Facebook — friendships can sometimes provide even warmer introductions than business connections can.
5. Explore options beyond VCs
Other fundraising avenues such as angel syndicates, angel groups, and equity crowdfunding can take time to set up, so they aren’t great for creating momentum at the beginning of a raise.
That said, they can be great tools for filling out a round that’s already more than two-thirds committed and ready to close.
Treat fundraising like a full-time job
This season of hustle will require a lot of any startup CEO. It’s hard and stressful, but it can be helpful to know what to expect going into your first round of fundraising.
You’ll want to treat this process like a full-time job. Assuming you already have a full-time job actually running your company, this means you have to get creative in order to make space for the fundraising process.
Consider delegating some day-to-day responsibilities to your co-founders, or look into hiring a part-time CEO to cover for you as you go all-in on raising capital for the future of your startup.
Nathan Beckord is the CEO of Foundersuite.com which makes software for raising capital. Foundersuite has helped entrepreneurs raise over $3 billion in seed and venture capital since 2016. He also hosts the podcast How I Raised It, a behind-the-scenes look at how startup founders raise money. This article is the third in a series about fundraising hacks.
A version of this article originally appeared on TechCrunch.
