STARTUP FUNDRAISING TIPS
Five tips to give your startup the best chance of landing investment at the idea stage.
In 2019 I had that pivotal life moment where I started a conversation with ‘wouldn’t it be cool if…’ and before I consciously knew what I was doing, I’d founded a startup.
If you’re reading this, you’re probably in the same boat. It’s an intoxicating feeling; for maybe the first time in your life, you are in complete control of your own destiny. Inspiration fuels you like a performance-enhancing drug and you scribble down ideas faster than an actor playing a genius in a biopic. You are the hero of your own story and you are going to slay that age-old nemesis, mediocrity.
And then you do some sums and your heart breaks like a contestant on X-Factor who didn’t make the live shows. You’re going to need money, and way more than you’d saved and that $512.54 left on your credit card isn’t going to cut it.
So unless you’re already well connected and have a godparent who has believed in you since your first nativity performance, you’re now going to have to find other means to raise the cash, lest you forget your entrepreneurial vision and that dream of running through your open-plan hipster office high-fiving your 400 employees.
I’ve been through this, I’ve been startup-ically broke and I’ve had success raising. I’ve also interviewed some savvy investors and founders on my show that know a lot about this topic. So here are my top tips to help you supercharge the process and hopefully win.
My assumptions — you have a good idea, you have thoroughly thought through the problem you’re solving, there’s a market for you to tap into and you are willing to work your socks off.
If there is one phrase that is consistent across all investors I’ve met, pitched or interviewed, it’s that the people are what matter most. And it makes complete sense because, in the early stage, that’s your only asset. So you need to make this asset attractive enough to invest in.
So where do you start? Begin by putting yourself in the mind of the investor. What would you want to see? Relevant experience? Subject matter expertise? Where would you look? LinkedIn? Google? Twitter? Crunchbase? The answer is yes to all. So you need to make sure at the bare minimum these are tip-top and a fair reflection of what a good bet you are.
But as I said, this is the minimum. You need to stand out. If you’re an expert, talk about it on podcasts, ask to join panels at events, write on Medium!
Now the hard bit, networking. Nobody likes it, it feels awkward and rarely natural. Unfortunately, you need to suck it up. Alex Dunsdon, one of the top investors in the UK says that serendipity is a true superpower, and you can improve the chances of having it by meeting more people. Go to startup events, meet other founders.
I used MeetUp and yes, some were terrible, but one gave me an investor, so it was worth it. If you can’t find a good one with a topic you care about, make one.
Investors have money, and money makes them attractive to startups. And like a vet carrying a leg of ham at a kennel, they are getting lots of attention. The average VC gets over 1000 applications a year and Angels will get over 100. It’s super competitive and you need to make your opportunity stand out. The things that make it sexy are obvious; Returns, Innovation, Sector and as per point 1, the team. Make sure you shout about these. Make sure the investor looks at your pitch and thinks ‘yeah, this is fucking cool’.
And after you have one investor, you can now create the most powerful investor emotion — FOMO. If people are investing or even just committing, make sure other investors know about it. VCs will always say that the most costly decisions are when they missed an opportunity, not the ones that went bad. There is no better validation for your opportunity than others investing and nothing will make people invest quicker.
FOMO Noun, informal Anxiety that an exciting or interesting event may currently be happening elsewhere.
You don’t know where your investment will come from. And anyone that tells you they do, are fibbing. So you need to try all angles. Case in point, our second investor came from a chap who overheard me pitching to someone else in a coffee shop and another was a listener to my podcast. You can’t predict this, so you need to try all angles. I recommend the following;
Investment Networks — my fave is Angel Investment Network and SeedInvest, they’re halfway between traditional crowdfunding and a syndicate. You post your pitch and can contact angels directly if you think they’ll be interested. Conversion is low, but it’s relatively time-efficient and the audience is specific and large. Here’s ours
Direct contact — find angels on LinkedIn and VCs on Google and contact them directly. Keep your email concise (team, problem, solution, market) and tailored with a ‘why them’ for each email and you will get better results.
Referral — ask funded founders for a referral to an investor. They will know lots because they’ve been through it and referrals have the best conversion rate.
Podcasts — go on lots and talk about your company. Spotaguest.com is great for finding shows that need guests.
Word of mouth — talk about your company to EVERYONE. We did it and in a rather cliche moment, we were offered investment on a golf course. Which if you’d seen any of us play golf, you’d know was quite remarkable.