Should you be raising money for your startup? If you are looking for capital, what is the psychology behind fundraising?
Without a doubt, raising capital is one of the most critical decisions entrepreneurs need to make for their business. Bringing in the wrong investors could be fatal as divorcing an investor is harder than divorcing your own husband or wife.
Moreover, the process of fundraising itself is a roller-coaster of emotions. In the morning you may feel like you are on top of the world while in the evening you may feel like the world is coming to an end. Embracing the journey and not accepting a no for an answer is what separates those that succeed from the ones that fail.
The Ultimate Guide To Pitch Decks
Storytelling is everything in fundraising where psychology is also present. For a winning deck, take a look at the pitch deck 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. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here).
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
By mastering the psychology behind fundraising you will have full control over the process. This will give you an edge and a clear advantage in order to close the deal.
With that been said, below are the critical factors to understand the psychology behind fundraising before prepping that pitch deck and getting ready for investor meetings. Don’t forget to share with friends on social media!
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Is a Big Or Small Piece Of The Pie Better?
Is it better to have a bigger piece of a smaller company, or a smaller piece of a much larger company. At its core, this is often what the decision to fundraise comes down to. If you crave ultimate control, and care more about near term profitability than bragging rights or global impact, then maybe you are fine bootstrapping for now. If you need or want to be a giant on the map, or need speed, then raising is probably a necessity. After all, owning 100% of a $100M company, is the same in dollars as owning 10% of a $1B company, right?
How Will These Investors Help Us Get To The Next Level?
What introductions can these investors make to secure success in future funding rounds? Will their name being attached to your startup alone make it magnetic for more money? Do they have a pattern of follow up investments with other desirable investment firms which will be great strategic plays for your startup? Do they have relationships with strategic acquirers or international funds in locations you plan to expand to?
How Will We Use The Funds?
Are they funding team development, for product creation, scaling, international expansion or to park in the bank for a rainy day? Is there an immediate need or use for the money, or are you raising just because the market is good for it right now?
What Milestone Will This Round Allow Us To Achieve?
What milestone will this round fund so that you can prime yourself to raise another in the next 6 to 18 months?
It’s also worth considering in advance who the next round of investors will be at the next stage. Will they be angels, VCs, private equity or corporations?
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them