If I was a founder, what would my fundraising process look like?

Raising capital is very similar to an outbound sales process (unless you’re one of the lucky few that’s garnishing inbound interest).

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It starts by collating a long list of investors.

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You then sort that list to exclude those that don’t invest into your sector, stage, geography, business model, etc.

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The next stage is where some start to get it wrong, they move straight to outreach, skipping out the research phase.

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By research I mean first working out who within your network might be able to make a warm introduction (like it or not, that will boost your chances). If nobody you know can make a warm intro then the next best option is a well thought out and tailored email or LinkedIn message. There’s a big difference from ‘Hey, we’re creating the Uber of [insert industry]’ to ‘Hey, we operate in X sector, I see you have invested into Y company previously. We think we’re solving a slightly different problem to Y company and there may be some synergies from us in the future. We’re looking for value add investors that know our sector, would you be interested in me sharing the deck or having a chat?’ That’s only one example, I’m not saying only reach out to investors that have invested into a business in your space before but to try and find some commonality and a hook that helps you stand out from the crowd.

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Some people will inevitably not respond and some will also decide it’s not for them, either at outreach stage or when reviewing the deck. You can ask for feedback, not all will give it but some of those that have reviewed the deck will. If you’re deck is well constructed you shouldn’t get much tangible feedback at that stage, as it will usually be due to something quite high level (don’t like the sector, not quite right for thesis, etc.) but if there’s any glaring issues with the deck the little feedback you get will be invaluable.

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Once you get into a pitch, again some investors won’t want to proceed (remember most investors only invest into c.1% of the deals they do) but you should ask for feedback and ask for specific details:

1?? Why is the investment not a fit for your fund?

2?? What would the business have to look like to be investable for you?

3?? Is there anything I could have done better in my presentation?

4?? Was there any other information you would have liked?

5?? At what point in the future should I re-engage?

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Let me be super clear, I am not advocating changing what your business does based on the feedback of any investor but capturing the above data, in an aggregated bank, will be massively valuable. By asking those direct questions you force much more detailed feedback than what you will otherwise get.

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Continue to rinse and repeat through subsequent meetings and the ongoing stages of the investment process, garnishing feedback at every point.

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I was at a Board meeting recently and the founders had done exactly that through the Series-A they were raising. The ongoing qualification at each stage not only meant that they could iterate and improve (where appropriate) but they could also niche down further and further on their ideal investor profile and focus maximum effort on those that were most likely to invest.

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Some might be thinking all that extra detail will be a massive time stealer. From what I’ve seen work historically, it is actually the opposite.