How to raise a seed round
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The document outlines key strategies for raising a seed round of funding, emphasizing that fundraising requires significant dedication and that investors should be approached strategically. It discusses the importance of establishing relationships, understanding investor priorities, and preparing compelling pitches tailored to their interests. The process is structured into stages: generating awareness, gauging interest, scheduling meetings, evaluating decisions, and closing deals.
How to raise a seed round
- 1. Michael Girdley Managing Director Geekdom Fund @mgirdley How to Raise a Seed Round
- 2. Agenda 1. Things To Know About Seed Fundraising 2. A Sample Fundraising Process 3. Q&A
- 3. Seed Fundraising is Hard It’s a ton of work. Expect for a co-founder to be fundraising nearly full-time each raise. (Sorry!)
- 4. Investors Are Customers You’re selling an investment in your company. Different investors have different priorities/parameters.
- 5. This is a Numbers Game You’re going to get told “No” lots of times.
- 6. Investors are Herd Animals Like it or not, investors watch what others do. If they see other investors buying in, you’ll see more success raising. So, a lead investor is key.
- 7. Lead Investors Are Awesome They agree to terms with you. They can help you find other investors to finish round.
- 8. Not All Investors are Created Equal Usually the guy who writes the biggest and smallest checks are your biggest headaches. Often because they’re out of their element.
- 9. Signs Investors are Potentially Bad They jerk you around. They have no experience investing in your industry or type company. They have a bad reputation.
- 11. You Need a Sales Process for Fundraising
- 12. Selling Yourself Requires the Right Tools You look put together in person and online. Your pitch deck looks SICK good with a nice logo. You showered and smell good. Your emails aren’t in comic sans and blue. Your logo doesn’t look like this ->
- 13. People Invest in People at Seed-Stage How do you make yourself look like a world-beater? How do you make the audience think you’ll move mountains? Your entire story needs to reinforce this idea. You are the one of thousands of wannabes to invest in.
- 14. Investors Must Be Accredited To invest in startups directly, your investors must be Accredited as defined by the IRS. There are other paths to get investor $ from non-accredited, but they mostly stink. Besides, accredited investors write bigger checks.
- 15. You Don’t Need a CRM for Seed There’s only one of you selling. You’ll only have a few hundred investor targets anyway. Put it in a google doc (not an EXCEL file -- so you can share it easily.) COLUMNS - Name - Email - LinkedIn Profile - How Found - Potential Intro Candidate - Target $ - Probability of closing - Last Contact - Next Contract
- 16. Different Inroads Are Better Than Others Warm Referral from Trusted Person is better than… Warm Referral from Untrusted Person is better than... Indirect Referral (pitch competition, etc) is better than… Cold Email is better than.. Not trying to reach someone.
- 17. Investors Invest In Lines, Not Dots If you’re cold talking to someone, expect them to not say yes first meeting. They want to get comfortable with you. That’s normal.
- 18. Things You can Do to Look Better Put some of your own money in Be all-in with a team that is all-in. Get external validation (LinkedIn testimonials, etc.) Find traction and quantify it
- 19. Give People Easy No’s Best are Yes’es Next best are fast No’s. Worst are Slow Maybe’s.
- 21. Example Process 1. Generate Awareness: Do you think they’re interested? 2. Interest: Are they actually interested? 3. Meeting: Will they dedicate 30 minutes to hear your pitch? 4. Decision: What is their decision and/or objections? 5. Close Them: Getting them to sign.
- 22. 1. Awareness: Fill Top of Funnel a. First-person personal networks b. Second-person personal networks c. Customers d. Luminaries e. AngelList f. Events g. Accelerators / Organizations
- 23. A. First-person Personal Networks 1. Sit down and go through EVERYONE you know, business or personal. 2. Will they know you if you reach out to them? Do they look like someone who is an accredited investor? Do they know someone who would be one? 3. Write their contact info in your spreadsheet.
- 24. B. Second-person Personal Networks 1. Take everyone from Step (a). Look through their LinkedIn and Angellist contacts. 2. Look at each person. Do they look like someone who is an accredited investor? Do they know someone who would be one? 3. Write their contact info in your spreadsheet.
- 25. C. Customers 1. Look at every customer and potential customer you’ve spoken with. 2. Look at each person. Do they look like someone who is an accredited investor? Do they know someone who would be one? 3. Write their contact info in your spreadsheet.
- 26. D. Luminaries If you are outside of a major tech hub, good chance the local Big Timers want you to innovate in their city. This can be the mayor, city council, economic development and benefactors. They will help you. 1. Go through the websites for your Chamber of Commerce, City Council, State Lege, etc. 2. Do they look like someone who will help you? 3. Put them in your spreadsheet.
- 27. E. AngelList / Gust / etc. Active angels and Seed VCs are on there. They want to be found. 1. Search for similar companies to yours (but not direct competitors). 2. Look at their investors. Do they invest in companies at your stage? Are they active? Are they sending signals they want to be contacted? Google them and spend 5-10 minutes to understand them. 3. If you think they might be interested, put them in your spreadsheet!
- 28. F. Events and Organizations These are angel groups, pitch contests, SXSW, Collision, TechCrunch Disrupt, etc. Some require you to pay. Some don’t. I don’t like pay-to-play personally. 1. Google funding sources and events. F6S has a nice list of them. 2. See which ones fit with you. 3. Put them in your spreadsheet. 4. Apply to the ones that might help you.
- 29. G. Accelerators and Incubators There are multiple flavors of these like RealCo, TechStars, MassChallenge, YC. Help because they are filtering mechanisms and connectors to investors. Recommendation: Do your homework.
- 30. 2. Interest Identification Now, you have your prospects. It should be a few hundred or more. You run a campaign against each one. It’s TAILORED to their situation, motivation, etc. Goal is to get to a meeting.
- 31. 2. Interest Identification (con’td) Notice I have played to what I *think* are the interests of each person. Selling your investment opp is solving the investor’s problem, not yours!
- 32. 2. Interest Identification (con’td) Cold emails have a lower success rate so need to be better. Customize your email to show it’s not a form email. This takes time to research the targets and understand why you’re a fit.
- 33. 2. Interest Identification (con’td) Your customers have other priorities than just making money by investing. Play to that. Call to actions are good.
- 34. 2. Interest Identification (con’td) It’s not just email BTW. Baby Boomers use the phone. Gen X uses email. Gen Y uses SMS/Twitter/some app you’ve never heard of. You have to meld to the customer’s needs.
- 35. 2(a). Referrals If someone says no or isn’t a target, then you want them to refer you to other people. Ask, “Do you know anyone else who we should talk to?” Forwardable emails is the right way to make it easy for them to help you. This link is great regarding that: https://alexiskold.net/2015/06/24/how-to-write-a-forwardable-introduction-e mail/
- 36. 3. Meeting Face to Face Pitch Meetings work best If not, use video call. On phone, people get distracted. Be prepared to travel to get in front of people. Don’t ask for crazy amounts of time. 30 mins introductory typical.
- 37. 3. Meeting (cont’d) Avoid coffee shops. Offices with tables preferred. Be honest about where you are and what you need. Sell them on why to invest. Good idea to ask what their feedback is. Ask whether they want to invest? “What do you think?”
- 38. 4. Decision In meeting, you should have found the investor’s decision-making process. Don’t push people too hard or you may lose them. Politely persistent. “When do you think we could expect an answer?”
- 39. 5. Closing Champagne problems now. Your lawyer should help guide this process. Docs get signed. Money shows up in the bank. Now, you have to deliver.
- 40. Q&A TIME!