It doesn’t matter how compelling your pitch deck might be, it’s just a beautifully constructed paperweight if you don’t have a coherent fundraising strategy.
You need to put a lot of serious, calculated thought into targeting the right type of investors and creating opportunities to get your pitch in front of them. You’ll also need to strategise how you’ll capture and convert your investors’ interest once your pitch has made it onto their desk and the various actions you’ll commit to taking every day, week and month to make all that happen.
That’s what a bulletproof fundraising strategy is and, even though it sounds like a lot of hard work, here’s the good news.
It will only take you a few hours of conscientious brainstorming and, at the very most, should only fill two sides of an A4 sheet of paper. Any more than that and you’re probably overthinking it.
A fundraising strategy will help you secure the investment you’re looking for much faster, which means you can get back to growing your business sooner. It can also save you months of frustration and wasted hard work and give you an invaluable edge against most of your competitors.
In our experience and our clients’ experience, that’s a few hours very well spent.
Targeting the right type of investors
Look the word ‘targeting’ up in any dictionary, and the definition will always read something like this:
- To select as an object of attention or attack
- To aim or direct (something)
In other words, the old-fashioned carpet-bombing of bombarding every Angel, VC and Fund that’s listed on Google will not work. Neither is contacting every investor you’re connected to on LinkedIn or endlessly stalking any of the above at a startup, pitch or investor event, hoping that your natural charisma will invite their interest.
You’ve got to target the investors you want by researching them thoroughly, identifying they’re the right fit for your business, and deciding on an appropriate way to approach them. You’ve got to study the investor connections in your network to see what they’ve invested into in the past and look online at your potential investor’s portfolios and specialisms to find out if they’re the right fit.
Once you’ve put together a list of all the likeliest investors for your company, separate them into two columns—’most likely to invest’ and ‘least likely to invest’—and rank them accordingly.
Here’s a tip: approach the ‘least likely to invest’ candidates first because they’ll be excellent practice while you’re sharpening a pitch and perfecting your tactics. Don’t go after anyone on the ‘most likely to invest’ list until you’re confident your pitch is as smooth and compelling as possible.
How to make contact with investors
Securing the right investor is all about building a relationship with that person. The best way to begin a relationship is almost always via a trusted third party giving you an introduction.
Of course, you can also connect with investors through a wide range of other ways (like networking, pitch events, etc.), and some clients we’ve worked with have been successful with that approach. However, we highly recommend doing everything you can to get a warm introduction before going in cold. That also includes asking investors on your ‘least likely to invest’ list if they could introduce you to investors who might be interested in your offering. Make sure you only ask them if your meeting has gone well and the chemistry between you feels right. No investor likes to feel you’re trying to use them as a stepping stone, and it’s a small enough community that negative word can get around.
Make your bulletproof fundraising strategy personal
This is where your diligent ‘targeting’ research will come into its own because when an investor realises that you’ve done your homework about them and you’ve specifically chosen them because you believe you’ll work well together, it makes them feel special. They’ll be much more predisposed to listen to what you have to say – and will hopefully invite you to pitch to them. Don’t be in a rush, though. Take time to build your relationship by making the investor fall gradually in love with you and your business.
Show them the real you
Investors invest in people, not businesses. Experienced investors are also savvy enough to recognise when an entrepreneur isn’t genuine or is hiding something from them.
It’s important to let them see your personality, so avoid hard-selling them when you first meet them and don’t chain yourself to a script when they give you the opportunity to pitch. Heavily scripted pitches sound soulless and robotic. They also signal a problem with confidence or that you might not know your business as well as you should.
Also, if you’ve had business failures in the past, be upfront about them. Don’t avoid or fudge the question and hope that the investor won’t do some digging and find the real truth out for themselves. They always will. Instead, own up to your mistakes and explain how you learned from them and used the experience to become a stronger businessperson. Investors will appreciate your honesty and might even be more impressed by what it’s taken you to get from there to here. Don’t forget; they’ll have made plenty of their own mistakes too.
Don’t stop practicing
Take every ‘real world’ opportunity to practice your pitch, so you become as comfortable delivering it as possible. Pitch at networking events and pitching competitions, get together with a group of entrepreneurial strangers and pitch to each other. You need to do everything you can to practice your pitch as much as you can before you approach anyone on your target list. It’s not unusual for our clients to practice their pitch hundreds of times before it’s ready to go.
Note: Pitching in front of the mirror or to family, friends and colleagues doesn’t count. It’s important to simulate the real pitching environment as much as possible.
Don’t put investors on a pedestal
Investors don’t just invest in people. Investors are people. They’re incredibly important people (at least to you because they’ve got the financial potential to make your dream a reality), but never forget that they’ll want to invest in an exciting entrepreneur like you almost as much as you want their investment. Don’t put them on a pedestal. Treat them as equals, and we guarantee you’ll both feel a lot more comfortable with each other because of it. Your relationship with them will also build a lot more organically.
You can’t raise investment if people don’t know who you are, so it’s essential to get out there as often as you can and build a network. Attend events and meetups, and don’t limit yourself to only looking for people who can invest in you.
When you build your relationships with the mindset of looking for people who might help you as opposed to single-mindedly going after the money, more doors will open, and you’ll meet the investors you need, eventually.
Build a tribe of investors
This is our favourite tactic because it amalgamates all the advice we’ve just given you into a genuinely powerful strategy.
By showing the investors the real you, practising at every opportunity to perfect a confident, winning pitch, treating investors as equals and being proactive, you’ll naturally build up a network of loyal fans and followers.
Those relationships are vitally important, so don’t neglect them. Stay in regular contact, meet up at events you’re attending or via a social media platform, and keep them up to date with what’s happening.
Don’t just tell them your success stories. Be honest and open about your difficulties to give them insight into the authentic you, which will help bond you more tightly together. Then, when you’re close to opening an investment round, send your tribe of contacts to your teaser pitch and stir up excitement and enthusiasm for the campaign you’re about to launch.
If your teaser pitch delivers on the hype you’ve created, investors will line up around the block to take meetings with you as soon as your campaign goes live. This is the tactic one of our clients used, and they closed their round after a single pitch with an offer of almost 50% more than they’d asked for.
It doesn’t matter how formidable your offering is; securing the perfect investment as quickly as possible depends on creating a coherent fundraising strategy, developing relationships, and knowing how to make your potential investor love you.
If you’d like to read more about this in greater detail, it’s all in chapter thirteen of Robot Mascot COO James Church’s bestselling book, Investable Entrepreneur. You can download a free copy of it here.