How to stop losing investor interest during fundraising? How can you keep them engaged, excited, and ready to put in their capital?
Startup fundraising is a sales game. A long one. It is its own sales venture that your company has to get serious about beyond your product. It’s not like giving away free trials online, selling one-click consumer products like a phone or meal delivery, or even larger ticket items like cars.
It is typically, not only a longer sales cycle, but also a longer closing process. A longer process that brings more risk of them losing interest and falling out.
The Ultimate Guide To Pitch Decks
Not only do you have to keep up their interest, stay top of mind, and drive urgency and action to make sure the money hits the bank, but also to maximize each connection.
Done right, each interested investor will spread the word and bring other investors, as well as raising awareness about your product and job openings.
So, how do you do it?
Here is the content that we will cover in this post. Let’s get started.
Experienced and savvy founders know that they are always fundraising. In fact, the best are already strategically working on the next round before they close the one on the table.
They are thinking about how to set it upright and get these investors to participate again if they can. Or at least to position themselves in this round to be a great fit for the next round of investors.
Fundraising relies heavily on trust and familiarity and relationships. Cold prospecting investors can work. Though it works much better when you have months or years to nurture and build that relationship before you really need the money and them on your board.
Build up slowly, soft sell, and plant the seeds in their minds that it is a good idea to invest in you, without you even having to ask. If they ask if they can invest with you first, you have really nailed it.
Trickle and build up to a short active campaign. Ask for their input and review of your pitch deck. Stay engaged with them on social media. Learn the vital skills of how to stop losing investor interest during fundraising.
Keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
Ramp Up Your PR, Marketing & Branding
In addition to direct outreach and communication, make sure you are showing up everywhere they are. Stay top of mind casually and subconsciously with your branding, PR, and marketing campaigns.
You can even often specifically target them and their network to be shown this content. Use social media, email ads, the news, blogs, and podcast appearances. Be sure there is always something new to see and share.
If you don’t have other traction during your fundraising campaign you can at least point to all the action out there on the web where you are being mentioned.
Build this action up and make sure you have content and ads scheduled to keep up the momentum through the active stage of your campaign.
Keep Your Campaign Short
It is easier to keep up interest if your campaign is short. If you are still talking about the same round six months later then they will fade out or think no one else is interested.
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Setting a tight time frame also helps block your own time. It gives you hard deadlines and keeps you moving forward, and getting on to the real business.
Just make sure you are well prepared in advance, and time isn’t so tight that you aren’t setting yourself up to fail. Depending on how you are raising this might be 30, 60, or 90 days.
Start With A Large Amount Of Committed Capital
People want to bet on winners. They want to associate themselves with success. No one wants to be the led investor. Yet, when you are 90% subscribed to, then everyone wants in.
Hack this issue by starting your public raise only after you have a large amount of pre-committed capital. This will help keep up the traction of your round too.
The sooner you can cross the 55% mark the better, and the higher your chances of being fully subscribed.
Start out with at least 25% to 30% in committed capital. Lower your initial ask if you need to. Then open it up once fully subscribed, and extend how much you’ll accept.
Create A Compelling Pitch Deck
Create a compelling pitch deck, know your Q&A, and rebuttals to objections. Have the path cleared to due diligence and fast funding so you lock them in on your first pitch, and can get the whole thing done before they get bored? Understand how to stop losing investor interest during fundraising
Make sure you are following up. Even if they seem wowed and say they are in, keep on following up. Email them, call them, text, hit them on social. Don’t spam or overdo it, but make sure you keep on showing up and following through.
Send Investor Updates On Progress
Make sure to keep sending investor updates on your progress. Let them know how the round is going, what are you getting done even before the round is closed, and other ways they can be involved.
Keeping up investor interest during fundraising rounds is critical for startups. It is all about momentum and carrying it across the finish line to closing. Use these tactics and strategies to start well, maintain interest and engagement, and secure the funding you need, or even more.
Practice how to stop losing investor interest during fundraising. Done well you can use each investor to open more doors and end up with your round oversubscribed.
You may find interesting as well our free library of business templates. There you will find every single template you will need when building and scaling your business completely for free. See it here.
In the video below How To Stop Losing Investor Interest During Fundraising I cover in detail this topic.
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FULL TRANSCRIPTION OF THIS VIDEO:
Hi, everyone. This is Alejandro Cremades, and today we’re going to be talking about how to stop losing investor interest during fundraising. Before we get started, make sure that you hit that Subscribe button, and this way, you will never miss out on any of the videos that we roll out every week.
Start-up fundraising is a game. It’s like poker. It combines strategy, it combines psychology, and it’s a long sales cycle. It could be shorter in some instances if you know the process and the methodology, but ultimately, it can be long. In today’s video, we’re going to be covering how you can stop losing that interest. We’re going to be breaking it down into detail and also in a step-by-step process with clear insights so that you get how you can tackle this. So, without further ado, let’s get into it.
You want to start early in the process because it’s all about building relationships. It’s all about trust, and ultimately, trust is built on integrity. What that is, is you being able to deliver on your promise. It’s never going to happen where you meet with an investor on day one, and right away, they give you a check. It just doesn’t happen. You only see that in the movies.
What you want to do is, rather than waiting to the point where you need the money, and you’re like, “Oh, my gosh, we need money. Let’s go out there,” you want to start, right away, literally as early as having an idea on a napkin. At that point, you go out, you start talking with people, and always think about that when you go, and you’re in fundraising mode, never go for money because as the saying goes: If you go for money, you’re going to get advice. But if you go for advice, you’re going to get money twice. Always go from the mindset of building the relationship of getting advice and of getting feedback from that investor and giving them the chance to slowly get to know you. And as a result of that, you may be able to get it from them in a smooth way with the suggestion of, “Are you guys looking for money?”
If you get that question: “Are you guys looking for money?” during the process, you need to know whether that question is coming from a position of interest or if that question is coming from a position of curiosity. If it’s coming from curiosity, you want to get them back into the advice, into the feedback mode. But if it’s coming from a position of interest, you want to push them over the edge, so that potentially, that investor becomes your lead investor, which is going to open the round for everyone else that you’ve perhaps been getting advice and feedback from and pushing them all toward making an investment. Because, remember, that at the end of the day, what drives checks is fear of missing out – that sense of the train leaving the station rather than the train being there stuck because if you create that sense, everyone is going to want to be in because if they don’t get in, the ticket is going to be more expensive or they’re going to even lose the train.
Ultimately, remember that for an investor, time is their best friend because the more time that goes by, the more that they get to see how you’re able to de-risk the investment and deliver on your promise. On your end, time is your worst enemy because the less time, the less runway, and the less runway, obviously, the less money in the bank and as well, the possibility of going bankrupt. So start as early as possible and focus on building those relationships. Leave aside the getting the check or the money right away.
You also want to ramp up the marketing and that PR. At the end of the day, what you’re doing is creating a storm. When you’re in fundraising mode, you want to time everything. You want to time a launch. You want to time getting people on board. You want to time whatever update that is media-worthy, and you want to time it as well with your fundraise so that it goes in parallel, and it’s something that you can share with the investor.
When you’re fundraising, remember that it’s all about trying to create that storm so that the investor constantly keeps hearing about you, whether it’s from people, whether it’s from the press, but they need to always keep you top-of-mind because that’s when everything clicks for them, and they’re going to be like, “It’s time to make an investment. I know these guys. They are doing an excellent job. I like this space. I’ll make an investment.” So, again, try to time whatever you’re doing with the fundraising as well as with the PR, the marketing, and getting the word out there about the exciting stuff that you are doing.
You need to keep your fundraising efforts and the timeline to a minimum. Typically, those rounds of financing, especially for startups, they’re going to be anywhere between three to six months. If it’s taking you more than six months, there’s something wrong; there’s something off, and at that point, you need to put an end to the fundraising. Try to reflect back on some of the feedback that you’ve been gathering, and implement that, and go back to market a few months from now. If you’re past six months, there’s clearly something off.
Remember, the minute that you say that you’re fundraising, the clock starts to tick. So if you’re going to people for advice, just keep it that way until you get a lead investor, someone that prices the round. Then, once you have that, then you can announce to the world that you’re raising money, and at that point, the clock is going to tick.
If it’s past three months, and you’re going back to an investor, and they see that you have not been able to raise your round, they’re going to think that everyone has rejected you, and that’s the reason why you’re going back to them because your opportunity is not that exciting. So, be careful with the timing, and always put yourself in that three-to-six-month timeframe – no more, no less.
Start with a very interesting committed capital. It needs to be a good amount. For example, when you’re finally activating the round, and you’ve got your lead investor, and now you’re announcing that the round is forming, the round has started, and that you’re raising the money, you want to have at least 20% of the round covered by that lead investor. Anything under 20% may be a bit tricky.
When you go out to people, and you say, “I’m raising money, and I’m in the middle of it,” they’re going to first ask you how much money you have committed for this round and who has committed that amount of money. That is going to be the social proof. Those are questions that you need to have in place because this is going to add and bring tremendous signaling toward the market and toward others potentially taking action and also investing.
Make sure that you are mastering storytelling. Storytelling is what’s going to give future possibilities. It’s all about packaging and positioning, whether it is the narrative that you’re using for your introductory meetings, where you’re really nailing it on the Why, What, and How.
- The Why: How you started with the business, what pushed you over the edge to bring it to life.
- The What: How is the market? What is the timing? Why now? How much is growing? What’s the market size? What’s the compounding annual growth rate?
- The How: What have you done today? What are some of the accomplishments? Who is behind it? Why do you have the right team executing in the right seats?
That’s for the introductory meeting – the Why, What, and How.
For the pitch deck, you want to make sure that you have a very compelling presentation that is between 15 to 25 slides – no less, no more. You can actually use the pitch deck template below that founders are using all over the world to raise millions. You don’t need to start from zero. Create something like what we have that would really help you.
Again, it’s all about storytelling because people are not investing in your present; they’re not investing in your past; they are investing in your future. And they are investing in you, and they are investing, as well, because they want to help you in building the business. So you’ve got to give them a really compelling future, and that’s what comes with storytelling.
On your timeline and on your strategy, you need to create a strategic roadmap that is going to include the follow-ups. On the follow-ups, always follow up with something compelling, with an update because remember, you’re never going to get an investment they want. You’re going to meet with the investor, and then over the course of time, you’re going to be following up and essentially delivering on your promise on what you promised them the first time that you met. So, you want to follow up when there are great milestones accomplished, on the revenue, when there are team members, and when there are mentions from the press, but you’ve got to be top-of-mind, always.
The follow-up is something that you want to time. If you are, for example, engaging with 50 investors, try to make sure that you have them all on the same face on that sales cycle because it’s ultimately a sales cycle. If you’re following up with all of them regarding a press mention or whatever that is, try to get them on the phone as a result but don’t try to have them all scattered with all types of different follow-ups. Try to keep it consistent because you’re going to make your life much easier this way.
You want to keep the investors always updated. It’s all about momentum, and that’s why you’re going to be essentially doing if you’re able to send good follow-ups if you’re able to keep them updated on the progress and on the round. Again, it’s all about the fear of missing out.
Hit a Like on this video. Leave a comment, as well, and let me know what you’re up to. Again, don’t forget to Subscribe to the channel because we’re rolling out videos every week that you don’t want to miss. And if you’re raising money, shoot me an email at [email protected]. I would love to help out. Thank you so much for watching.