She said she’s spoken to two investors outside of friends and family–informally. That’s over the past nine months.
This is her first startup; very smart, lots of experience, strong vision. But that really struck me–only two investors in nine months, and it’s time to start raising money.
Fundraising is a sales process. Here are some quick pointers:
- Get to know as many investors as possible, even if it’s too early.
- The next time you see them, let them know your progress.
- Send a monthly update.
- When you’re ready, meet with them in person. If you have trouble getting a meeting, shoot for a call, but that’s a last resort for me because you lose your primary power of persuasion–holding someone’s attention, drawing them in, infecting them with your passion
- Set a minimum level. I like $25k; if you need $250k the max number of people you have to keep informed is 10, which is manageable.
- Ask for the investment. If it’s an angel investor ask for double or triple the amount you think they’ll invest. They might surprise you and say yes.
- Most likely they’ll say no, but some will say “I don’t think I can do that much”, ask them how much they think they can do, and then wait for them to answer. Don’t try to fill in the pause–the ball is in their court, and they’ve indicated indirectly a willingness to invest, just not as much as you asked.
- Raise money on a rolling basis, meaning, don’t create a deal where you have to wait for all the checks to come in. Structure it so you can deposit checks and get to work, rather than having to aggregate dollars.
- If someone doesn’t invest, continue to keep them in the loop. Just because they aren’t interested now doesn’t mean they won’t change their minds.
- Prepare yourself for no. You will get turned down often. It’s ok, you’re still a great person with a great idea and the ability to execute. It’s part of startup life. Don’t look at it as rejection, look at it as filtering the investor pool until you find the right one(s).
- Have your shit together. Meaning don’t go through all of this effort without having your basic deal docs together (convertible note or equity docs), any financials, executive summary, etc. Any one investor might get really excited–enough to bring others on, and you can jeopardize it with a shaky set of stuff, or complete absence thereof.