Fundraising is a complex process; often it feels like founders of technology firms are throwing spaghetti at a wall to see which strands stick.
They reach out to all of their contacts, see which angels or venture capitalists their friends know, ask for introductions, and then contact those investors. They follow up and then potentially get a response. From there it's a process of presentations, meetings, emails and phone calls, answering questions and explaining the business.
Not only is the process complex, it’s also time consuming. So, how can founders accelerate the process? Learn two specific ways to reach your fundraising goals faster, as follows:
1. Get Organized
Getting funded means giving out a lot of information. It means sharing files internally with co-founders and colleagues and sharing externally with those interested in providing funds.
Internal Private File Sharing
To start, founders need to compile lists of everyone they know who might be able to help with an introduction or who might qualify as an investor.
Fundraising is a lot like selling; this initial list becomes those at the top of the funnel. That list will then be narrowed down to those more likely to actually invest based on their interest level or past investment history.
By doing research and qualifying potential investors, founders can avoid wasting time on those investors who are unlikely to invest. Founders will need to keep careful notes of whom they contact and the interest they receive respectively.
They may need to coordinate that information with other members of their team and share contact information for VCs and angels. Typically, many technology firms use email for this type of coordination. However, email is often inefficient.
Instead, founders should setup an internal private file sharing system and track information in spreadsheets or documents that everyone involved in fundraising can access or update. This also ensures that everyone is in alignment in working from the latest version of files.
External Private File Sharing
Once a potential investor is interested, founders should expect to field a variety of questions about their business, from the basics all the way to the more hard-hitting due diligence questions.
It’s important to have a private file sharing system that company founders can use to share answers to frequently asked investor questions and to share sensitive information securely.
An option like a secure virtual data room enables fundraisers to instantly grant remote, secure access to interested parties. It makes it easy to host multiple investors at once, confidentially. It also significantly simplifies the due diligence process, by making documents easy to access without compromising security.
Auditing features can even be used to track interest by allowing founders to see which investors spend the most time looking at specific information about the company, and to foresee potential questions by seeing which documents interested parties spend the most time with.
2. Always Be Raising (ABR)
In addition to getting organized and pitching only qualified prospects, founders can accelerate the process by making fundraising a part of their everyday activities.
Two-time entrepreneur turned VC Mark Suster recommends founders set aside 5% of their week, every week, to Always Be Raising (ABR).
Rather than spending 6 weeks fundraising every 18 months, by constantly taking focused VC meetings founders will have relationships already established when they are ready to raise additional funds. Investors invest in people they trust, and that type of trust can often take time to develop. This longer-term approach will greatly reduce the time necessary to raise the funds you need on each occasion.
Which just makes staying organized even more important—if it’s hard to keep track of your ongoing investor contact schedule and your many investor discussions when condensed into a 6-week period, it’s almost impossible when that process is stretched over the whole year.
Do you work on fundraising throughout the year? How do you keep your fundraising process organized? Leave us a comment and let us know!