Master These 8 Powerful Habits for Success in Fundraising
Startup founders will quickly realize that fundraising is an art. The more effective your fundraising efforts are, the more likely you are to raise those much-needed funds in the required timescales.
Here are 8 powerful fundraising habits to master. Achieve these and you will be ahead in the fundraising stakes.
Habit #1: Integrate Fundraising With Your Business Process
As a founder, you will find yourself becoming involved in a whole host of business-related tasks. Your wide and varied remit is essential to ensure your venture gets up and running in the best possible way.
While your business must evolve and progress it needs funding to do so. The harsh truth is that without immediate and future funding it is very likely your startup will get nowhere fast.
This means you should not view fundraising as a distraction from your day-to-day business needs, think of it as being an essential part of your responsibility. With that in mind, determine to make fundraising one of your core competencies and integrate it as a regular business process.
Yes, it will take up a fair bit of your time, energy, and attention but consider what the end result can be. That is securing sufficient funds to provide 12-24 months’ worth of runway for your company. Surely the effort required is worthy of such a goal.
Habit #2: Put in Place an Efficient, Repeatable & Flexible Process
Founders will have intimate knowledge of the product or service they are growing. However, it is often the case that little knowledge exists of what the fundraising process is all about. This means you should expect a steep learning curve.
With that in mind, founders should make sure that their data is organized and up-to-date and should always be ready to share with the investors. Examples of what a good Data Room Set should contain are:
- Your corporate pitch deck.
- Historical statements such as P&L (Profit & Loss), CF (Cash Flow), and Management Reports.
- Key business metrics statistics.
- An updated business plan.
- Any additional material you believe is important and that shows why the opportunity to invest in your company is such an attractive opportunity.
- A standard Q&A list (added to on an as and when required basis) – This should be based on questions or comments you get from investors during meetings and any communication feedback.
- An automated system of reminders that will alert you as to the optimum time to communicate with current and potential investors.
By getting into the habit of putting this fundraising data room in place as early as possible and regularly updating it you are building a key fundraising strategy. This will also save you a lot of preparation time when it does come to those all-important fundraising meetings.
The other real benefit is that such an automated system will allow you to communicate quickly and efficiently with current as well as potential investors. Any potential investor will surely appreciate such information as it will show that you have your finger on the ‘need to fundraise’ button.
Habit #3: One Fundraising Process Owner Only
Founders need to decide who within their company will be nominated as the fundraising process owner. In the vast majority of cases, this should be the CEO of their company (this is quite often but not always the founder).
Why? Because while investors are looking to give money to build your company they are also expecting to give that money to the person who ultimately runs the whole business.
It is the CEO’s responsibility to know and understand the company’s main strengths and weaknesses. They are responsible for company leadership and vision and should be your company’s “front” to investors.
This does not mean that fundraising is the sole responsibility of the CEO. Other key team members must be involved and during investor discussions, the right people from your team should be brought into the dialogue on an as and when-needed basis.
Habit #4: Focus on the Right Type of Investor
This habit needs ingraining from the start of your fundraising process. It is very clear that not all investors are created equal.
Examples here: Some will only invest in certain products, services, or business sectors. Then there are those who will only consider seed investments while others will focus on Series A funding rounds only.
This means that before you approach any investor, homework needs to be done. To save your (and investors) time the focus must be on getting your target audience right.
Here are 4 ways to segment an investors profile:
- What investment stage are you at (Seed, Series A, B, C, etc.) – Focus on investors related to your investment stage.
- What size of investment are you looking for? – This can be achieved by looking into past deals that prospective investors have undertaken. Through this, you will understand the amounts that potential investors could be ready to commit to.
- Check out the number of deals the potential investor has carried out in the past 6 to 12 months. This will help you understand just how actively they are investing.
- Geography – Depending where you are based in relation to where potential investors have previously invested should tell you which investors are actively looking to invest in your geographical area.
The bottom line here: It is quite rare to persuade an investor who is not already engaged in your business sector or geographical location to invest in your venture. Focus on the ones who are!
Habit #5: Regular Investor/Potential Investor Updates
Get into the habit of sending regular business updates to potential investors. There is a valid reason for saying this. As a company, you will never have the full and current inside track on the current situation and thinking of an investor or investment firm.
They could well be hungry and searching for new deals, on the other hand, they may only be closing very few deals during a certain period. With the latter in mind, even though the opportunity to invest in your company is the right fit, their internal strategy at that time can prevent them from doing so.
But as with everything in the business world, available investor funds are fluid. By sending regular business updates you will constantly keep your company on the radar of potential investors. This really is the only way to consistently hit the right timing in terms of when a potential investor has the resources to consider putting funds into your company.
Habit #6: Investor Meetings – Look, Listen, Learn
Get into the habit of making each investor meeting an addition to your learning curve. Your focus at these meetings should not be based solely on the expectation of receiving investment.
Obviously, that is what you are seeking but the straight fact is that your chances of getting cash from every meeting are less than 1%. That means receiving those needed funds at each meeting should not be the only outcome to take from the process. During such meetings, you should try to get everything possible from potential investors.
Pre-meeting preparation should include a list of questions you want to ask during these meetings. Being curious about what makes a potential investor tick can reap rewards. Many revel in sharing their thoughts and vision. Listening and understanding investor focus will give you an insight as to what they want in order to invest in your business.
Make it your job to take at least one idea and get one new contact from each of these meetings. Also, consider any changes you think need making to your pitch for future meetings.
Habit #7: Pepper Your Pitch With Inspired Long-Term Vision
As a first-time founder, it is quite unlikely that you will have fundraising pitch experience. This means you need to gain it. Lean on other founders in your network who have successfully gone through the fundraising process. You need a warts and all understanding of the right and wrong way to present a pitch.
If an opportunity arises for you to sit in on a pitch, take it. This could be a valuable experience in pitch setup and procedures. Practice your pitch with key team members and any other contacts who have pitch experience. You should be looking at fine-tuning your pitch until it reaches the stage where you are confident it will pique the interest of potential investors.
The key here is for you to inspire would-be investors with your long-term vision. Do not only try to sell the state of your company as it is today.
This is the main differentiator when it comes to those founders with great fundraising skills and those who lack them. You need to become a founder who can sell the future of your business while persuading those potential investors that they need to be part of it.
Habit #8: Take Advantage of Those in the Know
Fundraising is an art, it is also a complex process that is essential to your company’s success. There are many things a founder will learn along the way but this process can be enhanced by seeking experienced, in-depth knowledge of the fundraising world.
This is where WOWS Global comes in. Allowing us to partner with you in your fundraising journey means that any founder is taking a huge step in the right direction.
WOWS have developed a digital ecosystem to assist startups in every stage of their development. This includes (but is certainly not limited to) such things as beginning the fundraising process, perfecting your pitch, ensuring all legal documents and due diligence are in order, right through to sealing that all-important fundraising deal.
WOWS Global has the ability to bring founders and investors together in a mutually beneficial way. Our assistance, advice, and actions will give you a far greater chance of securing those much-needed funds. Funds that will be used to take your business from strength to strength.
To find out more and have a no-obligation discussion please do not hesitate to contact us on: firstname.lastname@example.org