Fundraising is an art. It requires patience, diligence, courage, and more patience. And, you need to get accustomed to being told “no.” A lot. The most successful fundraisers do not give up when doors are slammed in their face, which to reiterate, will happen more times than you will be willing or able to remember. Instead, they review their strategy, adjust appropriately, and get back out there. Here is what you need to know to succeed:
People often respond to questions with what they think the person presenting the questions wants to hear. Unfortunately, this seems particularly true when company leaders are trying to raise funds. When a company needs money, the leaders who plead the case tend to feel like they need to impress prospective investors. It is understandable of course, but ultimately, this is extremely imprudent. After all, if the firm ends up investing in your venture, they are going to find out the truth eventually. If they end up not liking what they learn, this could lead to disaster. Leaders need to recognize their company’s identity and proudly share it so that potential investors know exactly what they are getting and to ensure that it is a good match on both ends.
Know Your Audience
In addition to understanding your company and accurately portraying it, you have to know as much as possible about the intended audience. Now, this does not mean that you need to memorize the biographies and resumes of all the individuals that will be participating at your pitch presentation. However, having a sense of the firm’s culture, reputation, and goals will definitely help. Plus, as you do your research, you may discover that a prospective investor is not a good fit. For example, they may have a political agenda with which your company does not want to be aligned or past indiscretions that could cloud your own reputation. In the end, it is your responsibility to vet any potential financial partner. Watch the video to hear from SecureDoc's client, and Inogen CFO, Ali Bauerlein on the importance of choosing the right venture capital partner.
Know Your Numbers
Knowing your numbers does not consist of a bunch of estimates regarding where things stand. And, you definitely should not be changing your financial picture depending on with whom you are speaking. To fundraise well, your company must write out a detailed budget, calculate various projections based on different scenario possibilities, draft detailed financial statements, and put all of this together in a nice, tidy manner. Ideally, you should create an online deal room to house all of this important information, so that it is safely stored, quickly accessible, and easy to share. In addition, someone who will be a part of the pitch speeches needs to become extremely familiar with the details. It is important to be prepared and knowledgeable without having to shuffle a bunch of papers or stuttering that you will have to get back to the person asking.
Know Your Direction
It may be hard not to spend most of your focus on the here and now, but fundraising is primarily forward focused. Investors want to see solid groundwork for sure, but they are really interested in a company’s growth plan and even the exit strategy. If your company does not yet have a sense of its trajectory, it may be too soon to start fundraising. It is not right to expect others to fork over cash for your endeavor if you do not really know what that endeavor entails. The best course of action is to have all of your ducks in a row before embarking on the treacherous trail that is fundraising. And, being able to present evidence of diligent preparation during fundraising pitches happens to be one of the most likely ways to garner interest from investors.