10 quick tips for a successful funding round

You’ve decided that you need to raise money! Growing some thick skin is a good start but read on for 10 other tips on how to successfully close your funding round.

 

1. Your deck. Know every last detail but don’t always include it

Expect it to take a long time to perfect your pitchdeck. It makes you think deeply about all parts of your business and pushes you to do more research at every turn. Remember its purpose; to get you a meeting! No one will wire you money unless they have met you, possibly with the exception of crowdfunding, so build your deck with that objective in mind.

It should spark interest and excitement – and raising some questions too is ok. A meeting is the perfect place to answer them! Don’t feel compelled to include every detail, every data point and every element of your plans. But do include the hooks. If it is short, concise and to the point, this means two things. Firstly, it’s not a daunting task for the investor to read it cover to cover. Secondly, it shows you can articulate what is key about your business.

2. Know your numbers, I repeat, know your numbers

If you are  a Numbers Person or if you built your business model from scratch, this is easy – but if you’re not and you didn’t, it can be more challenging. But it’s a non negotiable one. Do whatever you need to do to know your numbers! Best case, take the time to understand the model; building a summary sheet from the main spreadsheet is a good way to do this. And learn (yes, learn like it’s an exam if you need to) the key points – e.g. top line revenues each year, margin, break even and low cash point.

Make sure you can explain any spikes or sharp downturns in revenues and costs. Know your assumptions inside out. Armed with these, you’ll be able to answer most questions around your numbers. Both sides know that projections are just that – your best (well researched) guess of the future – and that they will change a lot. Investors want to see that your financial model has been built on sound assumptions and with a lot of thought.

3. Find your optimum presenting format. Get comfortable

As a founder – and especially as a founder raising money – you’ll be doing a lot of presenting and public speaking, whether it’s a coffee with a potential investor or an organised pitch event. This requirement is often thrust in your lap unexpectedly and isn’t necessarily a natural skill or something you’ll be used to doing.

Finding the style you’re comfortable with and sticking to it can help. For me, I like face to face meetings with my laptop and some slides. So this is what I’ll push for. I don’t perform as well on the phone and I don’t perform as well without the rough guidance of my slides to help the flow – and aid explanations. Slides include useful charts and images (which speak a 1000 words so they say). If you’re not great on the numbers, your financials slide will help guide you when talking through your projections.

4.Ask the right people for the right introductions

A warm introduction to an investor can be really helpful. A warm introduction to an investor from someone that’s committed to your round is even better (push for these!) – but of course remember that the opposite can also true.

When asking for an introduction do two things. Firstly, ask people that either know you well or know your business well. The introduction reflects on the introducer and if one of these factors is not true, it can be hard for them to help you without investing significant time, which they are unlikely to do. Secondly, don’t expect the person you ask to do the research for you. Don’t ask them ‘if they know anyone that invests in eCommerce marketplaces‘, ask them if they will ‘make an introduction to [Sally Smith] because she invests in eCommerce marketplaces‘.

5. Listen hard but don’t change too much. Everyone has an opinion

Every investor you meet will have feedback and suggestions for you, whether on the amount you’re raising, your valuation, a slide you have to include, a structural change that’s vital… etc. It’s important to listen but don’t feel compelled to be malleable to every suggestion. If you incorporate all feedback, two things will happen. Firstly, you’ll never stop re writing your business plan. Secondly, the business will end up looking very different to the thing you set out to create and it might even stop making sense.

If every person you meet tells you the same thing, of course, stand up and listen but if 10 people suggest 10 different things, make a call on whether changes are actually needed to accommodate their opinions. I’ve seen pitch competitions where a panel of 5 investors have given a founder’s pitch every score on a 1 to 5 scale – who’s right and who’s wrong? No one necessarily, it’s just their opinion.

6. Ask questions of the investor. What you need to know is not taboo

Interactions with investors are often very one sided. The founder bares their soul, shares every detail of their business and diligently answers all questions. It is important (and ok!) to also ask the investor questions. It’s ok to ask if they are looking at any competing businesses. It’s ok to ask how much they usually invest. It’s ok to ask how long they take to make a decision. It’s ok to ask when they made their last investment.

As a founder, you need these answers to manage the investment process – and to find out if they are a serious investor, especially at seed stage.

7. Who’s helping you? Hopefully someone that has been-there-done-that

Being in touch with someone that has trodden the difficult fundraising path can be immensely helpful. From the simple reassurance that what you’re going through is normal and that you’re on the right track, through to guidance on how to progress an investor conversation. They are likely to be handy for introductions too!

8. Baby steps might be what you need

In an ideal world, you open your funding round, stating a date three months later that it will close. You meet investors, sell them into your proposition and get the full round committed. Everyone wires the cash on or around the same day and you close the round and get back to business.

If it doesn’t pan out like this for you that’s normal and expect that it won’t. It’s ok to take in the money for your round over a period of time (it makes the paperwork and legals a bit more complex but that’s a small price). To do so will build your confidence when meeting new investors and getting interested investors over the line. At each ‘yes’, push to get the cash wired to you right away. Send bank details prominently in communications. Edge bit by bit towards that finish line!

9. After all, tomorrow is another day!

Yes, I stole that from ‘Gone with the wind’ but it’s relevant here. There will be dark days, miserable times and many no’s – and you’ll be sad, stressed or frustrated (or all three). But you need to remind yourself that everything changes in a heartbeat. Just one meeting or call, one introduction or a “yes” and everything looks very different. Remember that and the dark days won’t last as long and won’t feel quite as gloomy.

10. Take up opportunities to meet investors

Be proactive and make the most of opportunities to meet investors. And we’re not talking about watching someone speak on stage, and bundling to get into the queue after they close, to grab 30 seconds with them. We’re talking about really meeting them and chatting to them about what you’re working on and finding out more about their objectives. You can do this over dinner with TableCrowd this month and next. There are some dinner suggestions below – people invest in people, so relationships are key.

> Dine with William McQuillan, partner at Frontline Ventures. They are an early stage B2B fund that invests between £150k to £1.5m > Find out more.

> Dine with Nick Halstead, programmer turned CEO, who raised over $80m for his businesses > Find out more.

> Dine with Alex Pitt, founder at Mustard Seed. They invest in businesses that generate positive and sustainable social outcomes > Find out more.

> Dine with David Barrie, founder at Wild Blue Cohort. They are an angel syndicate that invests up to £1m in a range of sectors > Find out more.

To view all our events, here’s the link and you can get in touch with any questions here: hello@tablecrowd.com.

 

Post by Kate Jackson

Founder at TableCrowd

@katejacksonk

 

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