The process - before a successful startup fundraises.
Sakshi Rajput
Helping founders tell stories, build pitch decks and inspire people | CEO - Fidle Illustrations
You got up this morning a little reluctantly,
Grabbed a cup of coffee,
Readjusted your focus to go through the next investor meeting to try again……
To sell (yes it is exactly that, SELLING)
A portion of your business because you have a team,
Big potential, customers, running business &
Inhuman-level grit.
When for the past 3 months an investor,
Kept on telling you that he is very much interested in your business and
That he/she is very much inspired by what you are doing and
liked your business but,
Abruptly backed out without giving you any valid reason.
Fundraising is one of the most painful times of a founder’s life, it takes a lot of energy to let people
Openly judge, your life’s toughest journey, sacrifices,
Criticise your beliefs and work.
and reject it.
When you go through so much madness all you want is to end it as soon as you can and get back to building your business peacefully.
After working on 30+ pitch decks with founders, and receiving feedback from investors & founders on pitches and business here’s what I learned.
Rising successfully is one thing, getting a good deal & good partners is another.
It roughly takes 8 months to 1 year for a first-time founder to be able to raise successfully.
But with the proper knowledge, process, support and people this can be reduced to 3 months or less.
Why not Bootstrap instead? In my opinion, it is the best thing to do, if one can but sometimes it’s not an option some businesses need capital, to go beyond a certain point.
And if done right the upside is huge.
A good investment not only gives access to resources but also.
Only if one can do it right & make it work in their favour.
After reading, researching & experiencing multiple founders’ fundraising processes.
9 things I would do if I have to raise my business in this tough climate.
And free resources to learn & refer to.
1. Understand where I fit in the conventional system.
In a range of 250K to 10M+ which fundraising stage do I belong to?
Or anywhere in between any of those.
I know it might sound basic but many founders are not clear about this, resulting in unnecessary to& fro during the fundraising process.
Once you have made up your mind, stick to your decisions.
2. Identify the industry I belong to
Again sounds basic but in most cases, your business would be a hybrid or overlap of two+ industries.
I will make sure to know all of them.
For example: -
Fidle:
Primary industries - Business consultation | Investment
Secondary industries - Visual communication | Data collection | Presentations services | Pitch deck services.
Superkons:
Primary industries - Climate tech.
Secondary industries - Home cleaning essentials | B2C | Retail
Spry :
Primary industry - Vertical SaaS | Management software.
Secondary - Sports | Athletic departments | School-college administration software.
3. Understand the basic mechanics of different ways to capitalize my company and how those impact founder equity and cap tables overall.
This is important to understand from the beginning because once you agree to the terms and sign the documents there is no going back.
Here is a list of a few terms knowing which will come in handy during the fundraising process.
QUICK GUIDES
To know the basics (Avg time required 1 hrs)
4. Customers - what sector or industry or people do I sell to?
Here I would need clarity on two levels.
→ At the microscopic level, problems & pain points
This includes.
Talking to my clients,
In the case of the pre-seed product, I would talk to my probable customers.
Know them to learn about their lives as much as possible.
To come to a point of clarity about the very specific pain points I want to solve and base my company’s growth on.
Beyond pre-seed, with active customers,
What my existing customers are paying for,
The most pressing pain & problems.
Example: For a vegan food snacks business microscopic problems would be.
→ At the macroscopic level, trends & growth rates
Here I would try to understand the industry as a whole that my business will cater to and curate data & reports to support this.
Example:-
5. Curate data.
I would need to collect data, trends & reports about my business, which can be included in the pitch deck and a good data room can be prepared.
Again 2 categories of data.
Company data would include:
Exceptions for climate tech companies.
For pre-revenue companies and pre-customers, it’s quite simple here.
Market data would include:
Ps: I would only include data for which I have a clear understanding of why it is happening & why it will keep on happening.
Recommended by LinkedIn
Quick Guides.
To build a data room I would need a few more docs.
Patents (if any)
Company incorporation details.
Existing investors & funding amount details.
Existing cap table structures & equity split details.
Cost, expenditure, and other operations-related financial details.
Quick Guides.
6. Team details & headshots.
The founding team
I would need to talk to my team members & curate,
7. Hire a good pitch deck consultant.
Who can
Hand over all the above information + whatever else they ask for.
And show up at the scheduled meetings for Q/A & reviews.
I will make sure after working with the presentation studio I have 2 to 3 decks ready.
I won’t ever attempt to do all of this by myself as writing stories & designing decks is another skill which cannot be mastered in the first go.
I would rather direct that energy & time into talking about my company & business because no one else can do it.
Once my deck is delegated into safe hands (Hopefully)
I will pray to get a good story and decks on time.
8. I will start compiling a list of potential investors by tapping into a few resources.
Quick Guides.
While I build the list of investors I would like to work with, I will also find those who can practically invest in my business.
Based on 4 factors.
First
Industries, their primary & secondary focus areas.
Remember, in the above section, I identified all the top industries I might fall into.
Now based on those I will start segregating investors.
Second
Based on the the investment amount I am looking for, and the stage of the business.
I will eliminate all the investors in my list who write smaller or bigger checks than what we are looking for or invest only in stages other than what we belong to.
Third
I will make sure to search, find or ask if they have made any investment in the last year- basically if they are actively investing or not.
If not, there is a high probability they might not invest even now, and just wasting my time.
Also, if talking to a VC, I will see the cycle of the fund, if it is in its last stages then accepting funding from them might not work in my best favour as they won’t be able to make any follow on investment in the later rounds.
Thus, while raising further rounds I will have to go to other VCs explaining why my previous investors are not backing me this time.
It’s a mess & I would like to avoid it.
Fourth.
Investment thesis.
If I can find one publicly, I will start collecting them all together & reading them to see where I fit the most & who aligns with my values the most.
If you want to go a step further before tying the knot with the investor you can try and talk to their portfolio company founders to seek their experience of working which those founders.
Once my list is ready,
9. I will start connecting with these investors via social media.
Primarily on Twitter, and LinkedIn, and attending pitch events, etc.
Definitely not asking for investment or pitching my business directly but initiating a conversation.
Once I have engaged with investors in some way, (Via their social media posts, DM’s or events ..etc.)
→If they ask for the deck, I will send one or
→I will ask for their feedback on the business or pitch deck or
→I will ask if they are interested in an investment opportunity & send my pitch deck to them.
In any of the cases I would actively seek feedback on my pitch, note the reactions of other people on my story & feedback on business.
And if I get replies like this then, it would mean following.
Come with more traction, is a - NO
We would invest in you if you can find a lead investor, is- we don’t have confidence in your business, we will see if someone else will bet on you or not.
If the pitch is not doing its job then expect questions like.
Q - Who do you sell to?
Q - What are you building?
Basically, questions are fundamental & should be clear after going through the deck.
Once I collect all this feedback, I will sit with my presentation studio, and iterate my story or stats wherever it is needed.
.
.
.
And again back into the game.
The catch here is to be prepared,
knowing what task exactly moves the needle &
Focusing exactly on those vitals
While delegating everything else to good hands
Depending on budget, team & available resources.
I would rather spend time being out there,
Talking about my business,
Trying to build momentum so that when I officially raise
there are enough people excited & talking about my company.
I would outsource or delegate all outsourceable/ delegatable tasks:
Heads up: Fundraising is expensive, and until & unless you raise successfully you will have to cover the maximum cost by yourself so be prepared with some budget in mind.
Quick Guides
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-If you need feedback or assistance with your pitch deck write to me at sakshi.rajput@fidle.co
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When a butterfly flaps its wings in China, it creates a tornado in Brazil.
You never know what impact your story can bring if shared with the right people, in the right way at the right time.