Getting The Check (Fundraising Part 3/3)
** NOTE: This is part 3 of a series on how to put yourself as a startup founder in the best possible position to receive a check. If you haven't yet, check back to Part 1 "Getting The Call" and Part 2 "Getting The Followup" so that you're up to speed **
Whew. You've already come a long way and you're now seeing that a check from an investor may be in your future.
You've already nailed your initial pitch that got you your first pitch call and you did so well in that first call by providing enough solid information for an internal investment memo that they want to talk again.
You know that there are a million things that can still go wrong (or even right!), but you think you've got a shot. And, you're finally at the stage where we can zero in on doing the last bit of work to give you a chance at receiving that check.
So what happens now? The truth is that there are an almost infinite number more articles/pieces written about earlier stages of the pitch process than this one...and that's because the answer is quite literally it depends.
But, never fret, there are a few things that you can do to put your best possible foot forward in this otherwise high-stakes situation. Although unlike the previous two articles, I'd say that almost nothing here is a pre-requisite (unless noted) to getting a check, I've got a menu of things that I'd suggest having ready for this second meeting and any meetings that happen beyond it:
Product Roadmap (1-3 slides)
Although you may not know the nuts and bolts of your future product roadmap, it's good to come armed to this second meeting with a quick map of what you're planning and how it will inform your strategy. Be sure to demonstrate that you really understand how your customer feedback loop works.
It also helps in your roadmap to explain how a hiring plan might plug into it. You don't need to get too, too deep into the numbers (because good investors know you're just guessing at this mind), but it helps to show that you're thinking about realistic expectations about your roadmap execution and that you're being thoughtful about applying one of your limited resources (Eg. your team) to those goals.
Go-To-Market Strategy (1-3 slides)
A summary of your planned product roadmap should feed directly into a deeper dive into your go to market strategy.
But, like in your last call, be careful not to rehash too much previous material. Instead, frame this section like your roadmap and tell the story of "The Wave" that I wrote about in Part 2 . If the last meeting was about explaining about how you plan on paddling into that wave, this meeting should be about how you're going to ride it.
It also helps to have at least some answer to how you'll either defend yourself from incumbents (if they exist) or copy-cats (which will exist if you're successful). Keep the focus on the immediate-term market segments and avoid going down the "What if (insert Fortune 50 company) builds this" trap question, which is a thought experiment which can only serve to weigh down your case.
This is also a chance for you to re-emphasize any benefits to your economies of scale that you likely teased going in to the first call. Avoid going down the details-heavy financial model route, but show how through those economics you can 10x revenue pretty quickly. Identify your assumptions and back them up as best as you can!
Evidence of Quick Action
I often tell founders I work with to have something in their back pocket that they've accomplished recently which demonstrates that they know how to work quickly as a team. This can take many forms, but often looks like a recent win that you can fold in to anything meaningful you'd like to share around traction.
The speed of your organization's development cycle will go a long way to giving an investor confidence that you are ready to work at the "speed of startups". This is often something that goes missed in later meetings with investors, but when you can figure out a way to include it in my experience it has huge benefits.
A Sticky Problem
Relatedly, it is in these second meetings that I often encourage founders to bring a sticky problem that they are trying to solve and figure out if there is a way to get an investor's feedback on it.
Not only do you get a chance to see how an investor approaches a problem, but it gives you some quick information about how your chemistry might work together after they join your cap table. Trust your instincts here.
领英推荐
Make sure the topic feels natural to the flow of the meeting, but even in a short 2-3 minute thought experiment you can gain a TON of data.
Prepared Data Room (Mandatory)
This is more for after a meeting, but it's good to have your data room ready. This is ultimately what an investor is going to ask for right before they make the final call.
You can easily google references to a data room and get any infinite number of different versions of it, but the important things you HAVE to have are:
You'll find better checklists online, but the above items are absolute must haves. And, an incomplete data room sends the signal that you aren't ready to roll from the moment you receive that check.
References
I was surprised when I first learned that a founder really should have a few references ready, but upon second thought it surprised me that I was surprised.
Just like a job (which is expensive to an employer), any good investor is going to want to know that you are reliable, communicative, trustworthy, and capable.
Have 2-3 professional references ready per founder just like it is a job. And, if possible, try to avoid investors/advisors/anyone already on your cap table.
If you want to go above and beyond, particularly for a B2B business, have a couple customer references at the ready too.
If you have the above items ready before you even start your fundraising process, you've positioned yourself in the best possible place to get a check. But let's go over some realities:
But, despite these realities, if you're at this place regardless of outcome you should be giving yourself enormous credit for getting here. Although you may be staring down years of the startup grind and be second-guessing the low starting salary/late nights that come with being a founder, you maintain your sanity with a healthy amount of checking in on it.
Ultimately your ability to be balanced in all things: hopeful yet grounded, rigorous yet evolving, passionate yet open-minded, etc., is what will help you build the resiliency necessary to follow your dream.
In taking a focused approach to nailing down that investor check, you are proving to yourself that you deserve to be here. Above perhaps all else, any good investor will sense that fire within you and it's poetic, hard-to-define reasons like that which are often the tip factor for why investors sign that check and wire you the money.
The stories behind those reasons are often the ones we hear about in the media, but don't forget that for every great story of luck and gut-feeling, there is an INSANE amount of work behind the scenes by a founder to get there. And that work starts now.
Good luck and keep me posted on what you learn.
P.S. A gentle reminder that you'll get multiple attempts at this! Just make sure that with each one that you're growing and learning something. Onwards and upwards!