May 01, 2019
Let me be clear; this is not a checklist, it is a handful of thoughts to help you deal with what you’re about to do. Raising capital from people you don’t know is hard, it should be hard but it can also be enjoyable if approached with the right mind-set and expectation.
1. Set your targets
It’s easy to get over excited and to want to ‘spray and pray’ an opportunity to invest into your business far and wide. It’s not that hard to get hold of investor email lists and VC lists so why not? Reality is you’ll end up overdosing on rejection, chasing no’s and wasting your time. Keep it manageable and relevant.
2. Prepare for rejection
You’re going to get a lot of rejection, be prepared for this. Consider who the rejection is coming from, digest any feedback (if you get any) and then move on politely. Conserve your emotional energy and let go.
3. Exercise brevity
We are all well used to consuming information in bite-sized summary format, think about your favourite brands and how clear their messaging is. Investors are like you, perhaps busier and very likely not starved of ideas for what to invest in. Be punchy, entertaining and personal, it’s not easy but it’s important to get right. Don’t look for shortcuts here, saying a lot in a short space of time is an art.
4. Consider f&f first
These will be the easier conversations you’ll have and you won’t have the anxiety over having to tell your story or fast tracking rapport building. Be careful though as the emotional commitment is serious and the feeling of responsibility may cloud your judgement. I’ve written a little more on this here.
5. Consider ECF
Equity crowdfunding has exploded over the last half decade and for good reason. Equity crowdfunding offers a great way to access a large pool of investors that are willing to invest smaller sums of money to support your business. The best known and most established platforms offer a sound legal framework, deal structure and reasonable fees and there is help on hand to support you through the process.
6. Don’t read too much industry press
If you do, be conscious that it will affect your perspective, journalists like to cover stories of companies getting funded as it’s a good hook. If all you see is a stream of companies in your space getting funded it could have a negative impact on your mental health if you’re having a quiet spell.
7. Create a concise deck and one-pager
Of course, create a great deck, heavy on visuals and no more than 15 slides. Have a financial model attached separately with an explainer of your thinking. Craft a really slick and digestible one-page summary to use when you first reach out. Don’t give away too much information, just enough to pique an interest. Of course, OneDeck can help you here.
8. Ensure you’ve availed your business of any tax reliefs possible
In the UK there are some of the most attractive tax schemes available anywhere in the world to encourage investment into early stage private companies. If you don’t know about SEIS and EIS then you need to, furthermore if you’ve not taken steps to get your company qualified then you need to do that, sooner rather than later as it can take several months to be granted.
9. Be clear on what you want and expect
This is linked to exercising brevity. Don’t be afraid to be explicit about what you want and need. Masking an investment ask as a “quick coffee and general catch up” is fine if you’ve got time on your hands but really it’s going to be a wasted endeavour if the person you’re meeting is angling for a consultancy gig. Being confident comes with time and there’s often value in exploratory meetings but perhaps revert to a 15 minute call to save time if you feel it may be a dead end.
10. Move quickly, be open minded AND determined
The shine on your venture will dull quickly, along with it your energy and enthusiasm will be tested. Use some entrepreneurial license to create some urgency, ask for clarity, respond quickly, recognise that investors will have a window of excitement during which you need to progress as far as possible. Have your documents lined up and get to the stage of having something signed that acts as a psychological confirmation that somebody is serious about investing.
Good luck and take some comfort in the fact that most founders find fundraising incredibly challenging.