Begin at the end: What most founders get wrong

There are a thousand and one ways to get your fundraising wrong, from the smallest details to fundamentally misunderstanding what fundraising actually is.

The problem is, that when startups and companies experience rejection, the issue with their pitch or their company goes untreated, as most companies can't pinpoint where their flaw actually lies.

Reviewing all the ways to get it wrong is an extensive task, so lets instead go over how to get it right, and avoid doing the biggest mistake of them all - beginning with yourself.

The 1# mistake startups make when fundraising

Last week I consulted with a company who told me that their financially advisors had recommend that they produce 200 videos for their marketing campaign to reach potential investors and strategic partners.

I patiently listened, and then asked a very simple question: ..."Why?"...

Low and behold, they didn't know. The best answer I got was "because they said so", followed by a laugh and a realization of how absurd the recommendation was.

Yet, it we are to step into the shoes of that company, it makes perfect sense. They are a company on the market, looking for investors, and they want to reach as many as possible with the their pitch, so they shoot wild and hope for the best.

You feel it too. It sounds good, but it's wrong...

It is wrong because those who try to reach everyone end up selling to no-one, and just like a marriage proposal, an investor pitch should be tailored to the right person, not a crowd where you through out a question and hope someone will say 'yes'.

So how do we get it right?

Begin with the investor, not your company

In order to go on a journey, you have to know where you are going. Startups get it wrong when they begin their journey from where they are at, without knowing where their investor is.

The switch you need to make in your fundraising is to not begin where you are, but begin where your investor is.

Your investor doesn't need 200 videos. He/she is specifically looking to an a very specific set of questions, and that amount is often surprisingly few.

By understand the core questions your investor wants answered, you can tailor your pitch to answer the right questions, instead of bombarding your prospects with everything and lose them within seconds.

So how do you do it?

How to lead your investor to you

The questions you want answered are in direct correlation to the journey your investor wants to take towards you and afterwards with you. It begins with where your investor is at, leading to where you are an extension to their goals, and continues forward towards the impact they wish to make.

Here are seven questions to answer to simply your investor journey:

What investments are the investor looking to make?

Does your potential investor have a track record of investing into companies of your scale, at your stage, and at the requested amount? If yes, you are fishing in the right pond. If no, I suggest you commit further research to find companies to are similar to your next stage and who invested in those companies, in order to reach out to them.

What path are they willing to go on?

Are the investments a fit to your conditions for receiving an investment? Are they looking to be a major shareholder? Are they a limited partner or a strategic partner with market opportunities? Are they a smaller investor with a quick turnaround or a larger VC who will potentially take longer in their due diligence process?

Knowing what kind of investor you're looking for helps you narrow down your options to find the right one that will lead to you, and now pivot halfway through.

Who are they looking for?

Have your potential investors previously invested in companies that have your desired track record? What were the red flags that should be waved early on, or were previously waved much too far into the due diligence process? What are the tough questions that should be asked early one before the become a problem?

In a stage where you are looking to show your best sides to attract investors, make sure to also be transparent, so that there won't be any negative surprises down the line before contracts are signed, potentially wasting months of work.

What journey do they wish to take with the company?

Do your values and goals align? Are you looking for a quick exit och to build a larger business? At what stage do you wish to exit? Do you wish to step away from the CEO role and stay a shareholder or stay in charge for the long run?

As your investment is for expansion, addressing coming questions that will become relevant for when you're expanding is critical to make sure you are a fit for the long run.

Align on goals for when you are further down the line to make sure that you don't come to a crossroads where you have to comprise in ways that might comprise your venture.

What milestones do they want to cross?

With your investor, as partners, where do you want to go together? At what stage do you seek new markets? How do you wish to reach them? Will you bring in new strategic partners? Will you engage in new investment rounds? Will there be a stage where growth isn't desirable or do you wish to grow to a large a corporation as possible?

Asking when you aim to do what gives you clarity for your future partnership, questions you should have wished you had answers to can be painstakingly difficult to deal with if you have disagreements further down the road that could have been avoided.

What impact do they want to make?

The term sustainability is often thrown around without people knowing its meaning. Sustainability can be defined as impact, where the term impact comes with two polar purposes. The first being to negate as much negative as possible, by doing business in a long term sustainable matter for every party affect. And second, to have as much positive impact as possible, both financially, but also socially and ethically.

What legacy do they wish to leave?

No matter what market you are in, each company has a brand. It is the values that marinate your company from its leadership to its team, creating synergy and vision for your everyday business endeavors. While many businesses believe that their venture might no be glamorous enough to even have such an idea, making a difference in a specific market can be what gives your company heart, and becomes the tug that pulls your investor in to partner with your company.

If this article could be summarized in one sentence, it would be this: When you fundraise, don't begin with yourself, begin with your investor.

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