How do you improve your chances of raising money?
You're ready to raise your startup funding. You want everything to be right, so you improve your
chances of getting funded, and you know that every investor meeting counts because you don't
know which investor will say yes. No one does. Today's video is all about making sure you are
truly prepared to raise your funding. I'll share with you based on my experience, a checklist of
the nine things you should do to prepare to raise funding, why these nine things are important, and
the steps you need to take to implement each item on the checklist. Finally, you'll wanna listen
to my one final thought segment at the end of today's video. It's well worth the wait. I hope
you like it.
Hi, I'm Brett on my channel. I help early stage startup CEOs like you raise money
and grow your startup. So if this sounds like you, then hit the subscribe button and the bell
so you get notified every time I release a new video. Let's get started. Let's start with
the first item on our checklist. Number one, a rehearsed pitch and pitch deck. When I
was an entrepreneur in residence for a San Francisco based venture capital fund, one of
my responsibilities was helping vet potential investments. I'll never forget this one company
that I met with the CEO started his pitch by fumbling through his slide deck and then saying
to me, here's a slide that might be good . We were sincerely interested in investing in the
CEO's company, but he had completely blown it with us because he was clearly unprepared. Here's
the deal. You will never know when lightning will strike.
When you're raising money, the first
investor you meet with might be the investor that funds your startup. However, you will
not get the investment if you're not prepared, so rehearse your pitch and your pitch deck. Get
to the meeting early and be ready to go once the investor arrives. Since we're speaking of the
investor you are meeting with, let's move on to number two on our list research. The investor
you are meeting with before you meet with them, raising money is sales. You are selling an equity
stake in your startup in return for a lot of money in any big money transaction. You wanna know
as much about the
Other side as you can. The beautiful thing is this is easy to do. You can
use LinkedIn to get a profile of the investor. You can go to the investor's website, you can
read the investors' posts and watch their YouTube videos. You can understand the atypical amount
the investor invests before the meeting. Next, let's move on to the next thing you should have
ready before the meeting. Number three, you need a lawyer who has previously negotiated startup
financing. I know lawyers are expensive, but hear me out because it's money well spent. Let's say an
investor gets excited about your company and they give you a term sheet. Term sheets have expiration
dates that can be as short as one day. Believe me, I know because I had one that was actually one
day I had 24 hours to respond, and that was it, and you are in no position to negotiate it on
your own.
That's why you'll want an experienced lawyer ready to go. There are other things your
lawyer will help you with, including making sure your corporate setup is correct for an equity
investment. Speaking of information you'll want, let's move on to number four on our list. A data
room that has all the information investors want. Great news, the investor you just met with wants
to proceed to diligence and they want access to your data room. You'll want the data room already
loaded with the information they're likely to ask for. The reason you wanna do this is you don't
want to be the delay in the investment process. The easier you make it for investors, the more
likely you are to get an investment. You'll need a protected environment for your data room. My
recommendation is using dify. You can find out more at www dot dig do com.
Next, you'll want
to do this, number five on our list, a list of potential investors in a process and strategy for
managing the investment process. It's a numbers game when you're raising money, remember this
statistic. For every 100 face-to-face meetings, an angel investor or VC will take, they will
invest in just one company. So my view was when I was raising money that I needed to meet with at
least 100 investors to raise money. In my case, it took us 64 investors before we raised our initial
funding. That's a lot of investors. To keep straight, you'll want a list of all the investors
you want to meet with
A strategy for the process, and you'll wanna manage the investment
process with a CRM tool of some sort. It can be a simple spreadsheet or you can use a CRM tool
like Pipedrive. Let's move on to number six on our list. Traction will need customer traction to
raise money. The traction you'll need will differ depending upon how much money you're trying to
raise. For example, if you're trying to raise your initial funding and you're raising from friends
and family, then you don't need any customer traction. However, if you're trying to raise from
angels or VCs, then the amount of traction goes up. You'll need paying customers and revenue. For
instance, if you're raising between $50,000 and $500,000, then you'll need monthly revenue between
$1,000 and $50,000. If you're raising between $500,000 and 5 million, then you'll need monthly
revenue between $50,000 and $500,000. Obviously, the more revenue the better.
Let's move on to
the next item on the list. Number seven references more good news. The investor wants to go forward
with the investment on the diligence list. They ask for a list of personal references from you and
customer references as well. Again, you don't want to be the delaying item, so you've done your
homework already. You wanna reach out to your professional references and customer references
and ask them for permission to use them as a reference. Then give them a heads up to expect
the call from a specific investor when it happens. Next, we're onto another good news. Point number
eight on our list, how to answer key questions. There are questions that investors always are
going to ask you The answer to these questions aren't necessarily disqualifying, but you want
to answer them the right way. Let me give you a couple of examples. The first is this question,
what are your valuation expectations? You want to answer that by saying, we'll, let the market
determine the valuation. The market is investors, and you'll only hurt yourself by putting a
value on your company. Watch this video for more on this. Let's move on to the second one. It's
this, what is the exit you are expecting? This is another classic VC question. Your answer should be
this. We're focused on building a great company. We'll let the exit take care of itself. Watch this
video
For more on this one. Now, if this content is resonating with you, then please hit the like
button right now. Now we're onto my one final thought. This is my reason number, reason number
nine, you need to have realistic expectations for the fundraising process. Raising money is not
instantaneous. The typical time to raise money is about six months. That's the typical time,
so I give myself about one year to raise money. That way you have some buffer just in case the
fundraising process takes longer than normal. Now, what did you learn from today's video? Put your
answer in the comments column below today's video, and if you have any questions, put them in the
comments column too, and I'll be happy to answer them for you. Now, I have one more thing for you
today. It's my free startup pitch deck template. It has all the slides you need to develop an
awesome pitch deck. Click the link below today's video and it's yours for free and for more great
content. Click on the video at the end of today's video, and if you haven't already, then click
the subscribe button to get notified every time I release a new video. I'm brett@brettjfox.com.
Thanks for watching today. Take care. Bye. .
