Funding is a vital question in the minds of entrepreneurs, when they think of growth. Some need funding after they create their minimum viable product and many dream of funding even before they reach the execution stage.
However, doodleblue wishes to tell every budding entrepreneur that the ideal stage for funding is when you are market ready and have a growing customer base who loves your product.
Here are some guidelines to get funded.
Connect and Reconnect
Building a list of names is vital for connecting with as many investors as you are able to catch hold of. Fundraising is a numbers game and unless you are growing every minute to viral heights or have previous experience, you are going to need to do a LOT of hunting and talking.
Why you need this list: The ratio between pitches and commitments is 95:5 and is pretty typical. Backtracking, you will need 200 names to zero in on 10 solid investors who are in for the real deal.
Select your angels
Brush up on your sales process and do a good amount of research on the suitability of investors. Be selective in whom you want to pursue.
There is nothing as frustrating as traveling across the country to meet with an investor who is looking for a higher ROI than you had decided on.
As a startup, wasting even an hour means wasting an eternity. Filter your list knowing whether:
- They have invested in your competitor
- They have funds to invest
- They are interested in your sector
- They are investing in startups of your development stage
- They have a good reputation
Segregate according to path of contact
Now you will have a list of contacts that are acquired from direct and third party. Segregate the list based on their level of accessibility.
To get introduced to any investor, look for first degree mutual connections that have had ideal deals with them. It helps to connect via a favorable connection.
No mutual connections? Read their portfolio and send cold-mails to the founders who have worked with those investors. Build a rapport and ask what their experience with the investors has been. Once you have their confidence, ask to be introduced to the investors.
As the last resort, cold email the investors. This is what all the startups do as their only resort but the response rate is very low. Never settle for the easiest way.
Manage your tracking system
Setting a status tracking system is a wise decision before starting to reach out.
You may be able to keep track of names, stages, conversations, follow ups and to-do items for a handful. Imagine your list growing to a fifty.
Avoid confusion by using Excel or Google Docs to keep track of the funding pipeline.
During the deal communication phase, have a 10-20 slide presentation slide pitch deck, a one page summary and a financial forecast with updated figures.
The pitch deck is the most important aspect that makes or breaks a deal. Present this deck to at least five outsiders – friends, advisors, your lawyer and any buddy investors. Collect feedback and tweak it accordingly.
Start having serious conversations with your investors, now that you are armed to face every step of progress.
Start the mail asking your connectors, asking for introductions.
Once your buddy confirms the list of investors, start a separate mail chain for each investor with a formal subject line and a body that has a short quip on your company, the need to get funding and the link to your pitch deck.
Adding these metrics give a short insight into your work, your need and your profile. All your connector has to do is to hit the Forward button and get the deal moving.
Making it easy for the connector is crucial as there is direct correlation between how busy someone is and how connected they are.
Once you have done your homework on which investor is looking for, in your startup, your board will be full of meeting cards!
Collaboration: Shruti Balakrishnan