Ensuring your Fundraising Game is "on pointe"
If you're reading this, chances are you're a startup founder (and if you happen to be a fellow VC, perhaps there's a more fruitful use of your time). You're likely contemplating raising funds or already navigating the intricate landscape of the fundraising process. When embarking on any new endeavor, beginning with the end goal in mind is wise. In this case, the ultimate goal is a successfully closed financing round, and the roadmap is deceptively simple—keep advancing to the next meeting.
The analogy of startup fundraising as akin to dating is a well-worn one, and after years on this side of the table, we find it apt. The stark reality is the average marriage lasts eight years in the US, which is approximately the same length of a venture fund-founder relationship if you get past your Serie A. Dating hits on two key factors one would normally have top of mind while searching for a partner - first impressions and building a relationship.
First impressions in fundraising typically consist of a visual (e.g. your deck, your website, etc.) and a source i.e. how you connected (e.g. cold email, intro from a fellow founder, etc). Your deck is sometimes your “calling card” or your Tinder profile. So we recommend spending both time and money on it to make sure it presents your business in the best light. Not only have a trusted but brutally honest advisor drill holes into your pitch deck but also have a designer make it easy on the eyes. (There are loads of affordable designers on Fiverr or Upwork). Investors see hundreds of decks a month; don’t give them a reason to say no before they have even met you.
That gets us to the second part of a first impression - the source. For some firms this matters and for others it does not. In general, it's fair to say most investors will prioritize deal flow from founders within their portfolio over cold outreach. Before you get the introduction, do a little homework on the fund to make sure that the investor does not have any competing startups in their portfolio and invests in businesses like yours (e.g. if you are a fintech company, make sure the fund is not healthcare only).
Let’s say you get introduced to a fund that seems like the perfect “fit,” and you have a meeting scheduled. It doesn’t hurt to set the tone for the meeting ahead of time e.g. sending your deck and lightweight agenda at least 24 hours before shows you are prepared. As you get further into the diligence process with a fund, ideally, they will be sending you an agenda with the questions and topics they want to spend time on. But if they don’t, ask ahead of the meeting if there are particular things they want you to cover.
In the context of the dating analogy, think of the upcoming meeting as a "first date." Several key considerations should guide your approach. This is a relationship business, so take the time to build rapport with the firm. While impressing investors with your background is essential, getting to know them is equally crucial. Allocate at least 5 minutes at the beginning of the meeting to introductions, as serendipitous connections can arise. You don't need to become best friends by the end, but you should grasp the basics, such as the investor's background, the firm's stage and industry focus, whether they lead or follow on, and whether they have looked at startups in your space prior.
Following introductions, steer the conversation back to your business and deliver your pitch. While it's trendy among founders to treat the first meeting as a casual conversation or a TedTalk without slides, this approach has its drawbacks. Visual aids, such as a well-crafted pitch deck, serve as powerful tools to convey your message effectively, especially to visual learners. Investors want to comprehend and believe in the significant vision you present in that initial pitch, and visuals can amplify that story.
Our last recommendation is to take a breath halfway and check in with your audience. Make sure you have not lost anyone along the way with too much industry jargon or too much content. Pausing mid-pitch again offers an opportunity to build rapport with the investor. Stopping to ask if what you said “makes sense” or if they “have heard this before” gives them a chance to engage with you and offer insights or get clarification. Recall your goal is to get to the next meeting with a fund i.e. don’t spend a 45-minute intro call hearing your own voice. You want to convey just enough of the highlights of what you are building in 45 minutes so that the investor will need to schedule a follow-up call to learn more.
Others have said it better: