6. Build relationships.
You have to build relationships with your VCs. Investing is personal and as much as an investor might like your company’s idea, it is their relationship with the team and the CEO that they are truly investing in.
7. Be a storyteller.
Seasoned investors hear lots of pitches and get solicited constantly. If you want to make sure that your business stands out, explain it though customer stories. For example, instead of just saying “Our customers are worth an average LTV of $x” say “Sally, from XYZ company is a great example of a typical customer. She loves our model so much, she is spending $x/month and has referred us 3 additional customers: ABC Corp, Windy City Corp and Big Apple Supply.”
The third party validation helps make your pitch real and gives them a frame of reference to see your business though your customers eyes.
8. Apply to an accelerator program.
I strongly recommend applying to an accelerator program like Y Combinator or 500 Startups. Before we joined Y Combinator we would try to pitch venture capitalists and they wouldn’t give us the time of day and if they did agree to a meeting, we’d show up and pitch a couple of interns instead of a Partner or an Associate.
Once we had the Y Combinator support, we could ask any of the YC partners for an introduction to an investor and generally a meeting with a Partner or an Associate got scheduled.
9. Get ready to date VC’s.
Raising money is like online dating. Each party checks out the others profile (Crunchbase, Angel List, Website, LinkedIn, Twitter) and then, if interested, sends the equivalent of a wink. If it’s mutual for both parties, email banter or a witty phone call ensues.
Perhaps you’ll get to a first date (in-person meeting) where you’ll ask awkward questions, review business plans and pro-formas and generally get to know each other better. After several of these, if you’re lucky, the investor will take an active interest in your company, want regular updates (dating). You should plan to date investors or Angels for a while before asking for a commitment; would you want to get married on the first date?
10. Build a roadmap.
We raised about 400k and found that a proper product roadmap with timing and goals was the key to raising money and keeping our investors happy. They could see the path of the product as well as metrics and goals associated with dates. This allowed us to have a measurable outcome, but also allow for future raises with agreeing to fund-able milestones set out by the product roadmap.
11. Develop a deadline and act fast.
We raised a small 500k seed round last year and parlayed that into an acquisition. VCs have so much deal flow you need to act fast. If you have interest you need to be good at closing, parlay your interested investors into leads and those into a full round. Know your numbers, have your diligence docs prepped.
Not everyone has the benefit of being a tech darling so if you find an easy to work with angel who’s entrepreneur friendly and reasonable just close a round and focus on building your business.
12. Go sell something.
I’ve raised over $1MM of angel rounding in the last year and a half for my company. Start with going out and selling something, even if you’re selling customers air. You can talk about your concept until you’re blue in the face, but there’s nothing like a customer or fifty that are willing to pay you money for your product when raising funding.
13. Focus on added value.
Seek out investors that add value beyond their cash. Unless you are creating the next great teeth whitener, don’t take an investment from the first dentist that shows up with a check. Treat your investors like advisers and leverage their time, connections and expertise.
Need more guidance? Checkout these tips from Both Sides of the Table creator Mark Suster, on raising venture capital.
Photo Credit: GANT
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