Rural Fundraising - Pipelines and Slide decks

An excerpt from the upcoming book, Building a Rural Startup Ecosystem

I’m not going to go deep on slide decks, as there is so much material and support out there on creating an investor deck. Moreover, most communities these days emphasize pitch competitions early on, so support is broad and wide. With that being said, I do want to note a few things.?

First off, decks will go through many iterations. For this reason, I recommend that founders have a one-pager to share. Once one shares a deck, even if they ask that it not be distributed, it’s out there and you have no idea whose inbox it will land in. You don’t want investors sharing a deck that is two years out of date, so have a one pager to share instead, and keep it extremely high level.?

Next, a deck will go through many edits, but make sure these are purposeful and driven by feedback from investors. Almost certainly, once founders start talking to investors, they’ll get two types of responses. Some will waffle, and some will say they’re not interested in investing. That first response isn’t super helpful. These are “nice” people who don’t want to turn you down, so they will say things like, “I’d love to hear more some time, keep me in the loop.”

But other investors will give solid feedback, or even tell exactly what needs to be done before they would consider investing. They might say something like, “I need to see a more compelling case for how you’re differentiating from (competitor), or “I’d like to see more of your free trial users converted to paid.”

Every year I buy a new pair of running shoe, and every year, running shoe companies have an entirely new update on all their shoes. Underneath all this marketing about their incredible improvements, can we honestly ask ourselves, when was the last time some huge breakthrough in running shoe technology actually took place? On the contrary, I’ve been more liable to pine for a model from years ago that really was perfect, but the company kept fidgeting rather than improving.

I bring this up so you make sure your founders don’t just fidget with their decks. Improve. Keep the feedback going and make sure the deck is getting them closer to what investors are really looking for.?

A deck should be a vessel into the world. As I will dig into later, rural founders have a trickier time getting around investors, as most rural communities don’t have a lot of investors hanging around. So your founders will need to get out into the world. Asking for feedback on a deck is not a bad way to go. But who are your founders even talking to in order to get this feedback?

Let’s dig into the investor pipeline.?

Well before any founder begins to raise money they should have a spreadsheet full of data on prospective investors. In some communities, investor spreadsheets will even be passed around, ideally filled with email addresses. If you can get ahold of one of these, it’s not a bad place to start.?

However, I have seldom met an investor who invests in everything. Almost all investors will have certain verticals, and they won’t wander outside of those, so any pipeline should be comprised of investors who invest in their industry. And founders shouldn’t try to get loose with how they interpret the fit. If an investor specializes in women’s wellness, an app that helps find cheap concert tickets isn’t a fit, even if the founder wants to make an argument that going to concerts is important for women to get some “recovery time.”

The great thing is that investors are very open about their verticals. This can get a little tricky with Angel Investors (most probably won’t have a website), but every VC firm will have a website that tells you exactly what they invest in.?

As for keeping track of this, there are a lot of paid tools out there, but your founders are probably pretty broke. My recommendation is they use a simple, free Airtable template. If you google “Airtable fundraising CRM” you will find a great little template, all ready to go.?

Of course, the purpose of a pipeline is for your founders to start making contact. As I mentioned earlier, the one thing we want to avoid is a founder getting started only once they’re out of money.?

What founders need to be doing is getting out there and introducing themselves to investors at least a full year before they are ready to raise. I always recommend that founders be very explicit about this, straight up telling investors, “…and we’re not raising right now.” Investors are so inundated by founders who are raising money that this alone might get their attention.?

The funny thing is that it’s kind of not true. By the very fact that the founder is out there talking to investors means they are, in a sense, raising money. But I like to think of it as more of a pre-raise period. The purpose of this pre-raise period is for founders to have built scores of warm relationships with investors that are ready to be activated once they decide it is time to officially raise a round.?

But how does one find these investors? I would start with this: most every rural community will have a larger city usually within 90 minutes away. Founders should seek out investors in that city and start reaching out. A great way to start is by digging into LinkedIn, or finding emails, and simply sending a “hey, I’ll be in {city name} next week. Would you have time to meet up for coffee?”

The subject lines of these emails is the most important part. Research by MailChimp shows that the two items most-likely to get an email opened are location and date (fun fact; the word most likely to get an email sent to spam? “Help.” So make sure the subject line isn’t “Help us raise our seed round”). A good subject line might be something like “coffee and chat with {company name}, Sept 3rd at Slow Drip Coffee?

If the investor recognizes the coffee shop and sees a date, they’ll quickly register that it’s not spam. Of course, your founders can try to propose a zoom call, but for the first few investors they engage with, I would highly recommend trying to go in-person.?

Of course, keeping in touch with investors, once contacted, is incredibly tricky. But there is an industry standard procedure: the newsletter. You might be thinking, “A newsletter? What is this, 1998?” But newsletters have made a huge comeback recently, especially with all the fallout over social media companies compiling and using personal data.?

Founders should be putting a newsletter out every 2 to 4 weeks. This should be an insiders email that focuses heavily on milestones (software development, customer acquisition, monthly recurring revenue, etc). A good newsletter will also have some kind of ask, or something the company could use help with. This might be something like “looking for introductions to small CPG companies” or something like that.?

Again, the subject line is highly important here. Let me ask, have you ever seen a news story, and realized that you basically got everything you needed to know just from the headline? It can be the same with emails. You can expect that most investors won’t actually open and read the email. That’s OK. But a great subject line can convey the major points. Something like “{company name} blows past MRR goals for September” conveys to an investor that the company is cruising along and making great progress. That’s a huge win.?