50 Investor Tips After Meeting 500 Investors for Raising Money
The before, during and post investor loop for closing startup funds.
While participating in my fourth accelerator, Start X, Sahin Boydas (my cofounder) and I realized that many entrepreneurs have similar questions related to fundraising. After taking 500 meetings with investors myself, I thought it would be helpful to list some of the most useful tips that many startup founders experience throughout the investor loop. This is a particularly helpful “cheat sheet” for angel and seed stage entrepreneurs looking to bring in their first checks.
These investors comprised of a mix of the following:
75% A+ Seed and Series A investors (~ fund size 25M+)
25% Angels (serial angel investors including high profiles investors and entrepreneurs)
Hopefully, these tips — broken into categories of Before, During and After — help answer some of your most burning questions while starting to fundraise.
Before the meeting:
- Get to the partner at each firm that’s most closely associated with your business vertical. The decision makers are the partners, but that doesn’t mean you can’t build a relationship with an up-and-coming associate who’s eager to make a name for themselves and likely to stay in the business.
- Use the right resources. The best places to find your investors are on Angelist, Crunchbase, LinkedIn, the VC’s website or on Twitter. Try to find competitors in your space: this will help you find the most relevant investors to connect with.
- Have high quality, notable advisors to show some initial traction and demonstrate that others believe in what you are building. It’s not a necessity, but it helps to get thought-leaders in your space as strategic advisors to build legitimacy for your business.
- Understand the seasons. VC’s are on a seasonal schedule that’s pretty predictable. During Summer, they are scarce (June-August) as well as Winter (November-January). The best times to fundraise and connect with investors are Spring (February-June), and Fall (September-November).
- Keep things short. Emails to investors don’t need to be long — 2 sentences and a couple of outstanding facts about your company that will excite the investor is usually enough to grab their attention. Using bullets can feel a bit spammy so make sure your emails are personable and friendly.
- Similarly, understand that investors want to invest in someone that they can see building a long-term relationship with. So your intro should be somewhat complementary to the investor — or, at the very least, acknowledge their expertise. Also share why you think they are a perfect match for your company.
- If you’re meeting for coffee, pick a cafe that has good wi-fi and easy parking. You want to be able to have your deck handy in case you need it, so proper wi-fi is a must. It can put an investor in a bad mood if he/she can’t find parking. Let’s try to get everyone in a good mood before the meeting.
- Opt for face-time. If an investor wants to do a phone call for the first meeting, try to change it to an ‘in-person’ if they are local. If they are far away, like in another city, phone call will suffice.
- Don’t send your deck unless you don’t mind them sharing the deck with your competitor.
- Do your research before your meeting: find something in common between you and the investor you’re meeting. Remember, you should be doing your homework and diligence just as much as they should be doing their diligence on you.
- Always look for a warm intro from an entrepreneur who’s on good terms with that particular investor.
- Don’t be afraid to cold email investors, either.
- Keep in mind that you’re the one worth billions of dollars and they should be lucky to invest in you.
- Investors are looking for the next billion dollar business, so make sure your pitch is big and paints a picture of how you will get there.
- It’s usually better to have the first meeting with one founder, not two. I know other members of your team are dying to make a connection with an investor and share how amazing their product is, but always opt to have a one-on-one conversation with investors.
- Practice pitching yourself and your company in a two-minute pitch, five- minute pitch and then a 10-minute pitch. And make sure to video record yourself so you can see where you need to improve your story.
- While you’re at dinner or out with friends, try to pitch to people. It helps you build confidence seeing the reaction of people in what you’re building and allows you to make those early changes before you meet an angel.
- Wear appropriate clothes that show your professionalism and that you’re serious about building a successful company.
- Sometimes it helps to listen to upbeat music or drink coffee prior to the meeting so your energy stays high. Investment decisions are emotional so energy is more important than you think. Always come in with positive high energy, even if the mood of the investor is otherwise.
- Personally, I prefer coffee meetings as a first meeting, because it’s less formal and more about getting to know you as a person. If things go well, you’ll be invited for a second meeting (usually in their office).
- If you hear through the grapevine that an investor is not a good ally for entrepreneurs, do not take the meeting. Even if you’re in debt.
- Friends and family rounds can be a great way to get your company started, but if you’re not comfortable getting close ones involved, it’s perfectly ok to skip and go straight to an angel round.
- Don’t get intros from other investors who have not invested. Only get intros from those who have committed to the round after they have wired. It’s not a good signal if an investor skips investing, and then makes an intro to another investor.
- Seek out a mentor, preferably not in your vertical. This will ensure there is no competition, and it also helps if they are more experienced than you. Ask for pitch and fundraising advice. In general, mentors who are experienced entrepreneurs can help give their experience and perspective on a lot of difficult situations you’re dealing with.
- Network. It’s helpful to go to events once or twice a month so you stay connected to other entrepreneurs. You never know when you will meet your next engineer or friendly entrepreneur who wants to help you with intros to investors.
- Apply to accelerators on the side while you’re fundraising. It’s a great option if you get accepted. Accelerators usually come with a $150k check and add more structure while giving an instant community for entrepreneurs who usually get isolated while building their product.
During the meeting:
27. Always speak from the heart and be honest with investors. Nobody likes a fraud.
28. If you don’t know the answer to the question, let them know you will get back to them about it. Don’t make something up. If there’s no trust in you, how can they trust you to take their money?
29. Sell your story and vision for early-stage companies. Investors invest in you early on.
30. If you don’t have the traction or business model hammered down yet, talk about the total addressable market (TAM) and how you’re going to ‘win’ the market.
31. Speak about why you’re the best founder and team to solve this ‘problem.’ If you have any previous relevance or insight on why you are the one to fix the problem, that goes a long way.
32. Investors like to be inspired and usually enjoy high energy during the meeting, so try to keep the excitement contagious for the big idea you’re about to execute.
33. Don’t let the meetings drag on for more than an hour. You’re a busy entrepreneur with product to build so 45 minutes should be plenty of time for the first meeting.
34. Ask the investor questions. This is a two-way street. Some examples of a couple questions are, “How will you help support our company as we grow?” Or “How do you help your startups once you invest?”
35. Treat the first meeting as a ‘I’m getting to know you and you’re trying to get to know me’. You want to get the most out of this meeting so you can learn if the investor is going to be a good strategic fit for your business or not.
36. Know that the deck isn’t the end all be all. So don’t panic if you don’t open your deck once during a meeting and instead only chat with the investor. Sometimes you’ll use the deck and other times you won’t.
37. If you don’t think they’re a great investor or fit for your company, don’t continue with the full pitch. There’s no need to share everything if it’s not going to pan out. Wrap it up quickly and leave.
38. For better or for worse, after several meetings you know within the first 5 minutes whether an investor is going to be a good fit for you or not. So trust your instincts.
39. Listen to investors during the meeting. Nobody wants to partner with an entrepreneur who isn’t thoughtful and does not listen to an investor or some ideas they may have to improve.
40. Be open to take advice and feedback because it will only help you more in your next meeting.
After the meeting:
41. Keep in mind that everyone has an opinion, and not all opinions are good. Nobody knows your market better than you, so take every opinion with a grain of salt.
42. Learn to let go of the meeting and prepare for the next meeting. Many times investor meetings are back to back and you need to learn to let go of the previous meeting and prepare for the next with the same kind of new and high energy as the first. It’s pretty common that some meetings don’t go as smoothly as expected whether it’s an investor who’s on the phone the entire time while you’re pitching or asking questions unrelated to your business. So don’t let one bad meeting spill into the next ones.
43. Try to follow up with the investor within 48 hours thanking them for their time and asking if there are any questions they might have.
44. It’s good to have another investor you know or a trusted fellow entrepreneur back channel with the investor to get honest feedback.
45. Fundraising takes an average of six months. You should be able to close a check within four months and usually, the domino effect happens as soon as you bring in a big angel or lead investor.
46. It’s important to show progress to early investors so they know you’re dedicated and serious about execution (especially if you’re a first-time founder). Be prepared to meet with angels every 3–4 weeks to show progress and build a relationship with the ones you really like.
47. Pay attention to what you think worked or didn’t work about your deck or your story during fundraising and be prepared to modify and change to make a stronger story for investors. Your product is always iterating and so should your story.
48. If you don’t raise within the allocated time you set for yourself, you have to wait six months to start the process again. Find another way to survive and take a break from fundraising for six months so that when you restart, it is a fresh new round for investors and not something you’re shopping around for months on end.
49. If you meet a lot of investors you really like, it can be helpful to group the investors in an email (all in bcc) to keep them updated on your progress. It can help maintain the relationship for the long term.
50. You’ve taken the time to read all of these pointers, so get out there and fundraise!
* Thanks Alysha Light for your help in finalizing this article :)
Dana Loberg is CEO and co-founder of Leo AR, the first augmented reality communications platform that gives anyone the power to enrich the world around them with realistic 3D and 4D animated objects and photogrammetry. Follower her @luckyloberg.