Fundraising

To get the 3 VC checks for our $780k pre-seed, I built an investor pipeline of 300 funds. Here's how underrepresented founders can figure out how many funds they need to target to raise a round of VC funding 👇🏾 Your investor pipeline is a list of funds and angel investors that you're targeting to invest in your round. Like sales, it's a funnel. For every 10 investors on our target list, I got a meeting with 3 of them - a 30% conversion rate. For every 30 meetings, I got 1 check. Unless you're YC-backed or a founder with a great track record, I wouldn't plan on a list-to-meeting conversion rate higher than 50% or a meeting-to-check conversion rate higher than 10%. Once you have these numbers, you need to work backward to figure out how many investors you need on your list. A $1M round will probably break out like this: - 1 lead investor for $500k - 1 follow-on investor for $250k - 1 follow-on investor for $150k - $100k in smaller checks from angels and friends and family So, you need 3 checks to form your round. Now let's work backward to figure out how many funds we need on our target list. Assuming better than average conversion rates of 40% for a meeting and 5% for a check, the math shapes out to: - 3 is 5% of 60 → 𝗪𝗲 𝗻𝗲𝗲𝗱 𝟲𝟬 𝗺𝗲𝗲𝘁𝗶𝗻𝗴𝘀 - 60 is 40% of 150 → 𝗪𝗲 𝗻𝗲𝗲𝗱 𝟭𝟱𝟬 𝗳𝘂𝗻𝗱𝘀 𝗼𝗻 𝗼𝘂𝗿 𝘁𝗮𝗿𝗴𝗲𝘁 𝗹𝗶𝘀𝘁 Note - these numbers are *very* optimistic. Y'all know the deal - work twice as hard for half as much. Plan on your conversion rates to be half that of other founders, which means you'll need to talk to twice as many funds. There's a reason Black founders get less than 1% of VC funding 🤷🏾♂️ Having such a large list sounds like a lot (and it is), but knowing this number makes the process so much easier. Treat it like a game. The sooner you get to 150 investor touches, the sooner you get your money. #venturecapital #fundraising #blackfounders

What's the secret to securing funding from foundations? This question, in various forms, has been asked of me a lot since I my post about the fundraising component of Mongabay's strategic plan (https://bit.ly/3NVeRd2) a few days ago. To be clear, I don't claim to be an expert in this field. However, I can certainly share insights from my decade-long experience of elevating Mongabay's foundation support from zero to about $5M last year. The right messaging When I initially began seeking funding from foundations, I received no response about 90% of the time. When I did receive a response, it was almost invariably, "no thanks". Despite my belief that my initial outreach was targeted (e.g. foundations that supported areas aligning with Mongabay’s work like journalism and conservation), I soon recognized a need to revise my targeting and messaging. Program officers at philanthropic foundations are usually in the business of giving away money effectively. That last word is important: You might be surprised how many times I’ve been told that it’s hard to give away money effectively. In that initial outreach, I put too much emphasis on what Mongabay is doing rather than how its work could help program officers better accomplish their foundation’s objectives. So I tailored my message to explain the value proposition of Mongabay’s independent journalism. This was a nuanced argument because to many, journalism can feel like a peripheral intervention when compared with establishing a protected area, for example. Know your strengths My job was to explain how objective journalism – distinct from PR and communications – could act as a catalyst in several ways, including informing key decision makers, increasing awareness, and functioning as a due diligence tool. Understand your audience Adapting my message and ensuring it reached the right person required research to understand a foundation’s strategy and objectives, as well as the individuals responsible for granting funds to organizations. Program officers are typically inundated with requests – keeping your message short and clear may help it break through. Build relationships In the fundraising world, it's often said that "People give to people, not causes." This might be less true with institutional foundations, but relationship-building is still critical. Seek intros My success rates with cold outreach have been low – the most common response to my foundation inquiries remains a lack of response. Don't hesitate to ask current donors for appropriate introductions to other funders. Measure impact One reason, I believe, for Mongabay's high renewal rate from foundations is our commitment to gathering evidence of the impact of our work. Providing an example of impact can be a great way to follow up with a donor. _ While everything I’ve shared here is very basic, I confess I've overlooked these points myself at times. Foundations aren't easy, but they can provide a strong base of support.

What Are You Supposed To Say — And Not Say — During a VC Intro Call? Be wary of some of the advice you hear. The goal is not to get a “coffee”, or just to “learn”. And 95% of startups should not be running a "tight process" with tight deadlines and aggressive terms. 95% of startups, especially in 2023, just don't aren't hot enough to play games. A VC intro Zoom is a sales call. Your job — if you want funding now, or later — is to move the opportunity down the pipeline. You’re in sales as a founder CEO. In stock sales. Unless you have a very strong hand — do not play games. So IMHE at least: 1/ Spit it out. Get to the point — fast. Make the VC want to invest in the first 120 seconds of the Zoom. That’s your goal. You’ve got maybe 5 minutes max to make a strong impression as a good investment candidate, and 20 minutes to get them deeply interested.  That doesn’t mean be overly simplistic. It means make the pitch tight. And run it by a few friendlies. Ask them if, 5 minutes in, they’d likely invest? If not, get to the point faster. 2/ Lead with your best metrics — and speak with data. Share the metrics that matter ASAP. Don’t try to hide your ARR, or your growth rate, or when you were founded. But do lead with your best metrics by all means. 3/ Send over the deck ahead of time. The best investors will do their homework and read it before the call. Being coy here does not help, 9+ times out of 10. Saying “I prefer to send the deck after our call” will simply turn off a lot of investors that actually want to put in the work. 4/ Be clear on how much you want to raise. This helps investors quickly figure out if you are in their sweet spot or not. Ask what they’d like to learn more about. Get to the point, then ask what they’d like to dig in on. 5/ Finally, ask for next steps and honest, direct feedback. And if you can — take the next meeting in person. 50% of what a VC invests in is the founders and CEO in particular. It’s much harder to get a sense over a call.

How to raise venture capital when you don’t have any investor connections! It took me 219 investor calls to get 29 Yes’s from investors for our $2.55m seed round! Every single investor on our cap table can be mapped back to a cold outreach. Here are some tips and tricks that I used to build my investor network as a first time, non-ivy league, non-tech, female immigrant founder: 💎Show up! When u’re a first time founder with absolutely no connections, you gotta start from scratch and get on people’s radars. Blasting mass emails isn’t gonna do that! For me what worked was joining virtual pitch competitions, twitter spaces & documenting my founder journey on twitter! Pick your social media platform (it looks like more investors are now on LinkedIn than twitter, unless u’re web3) and share your journey with authenticity, transparency & creativity! Grab every single opportunity you get to share your vision and be hungry to learn! Building in public is your best strategy! 🐐”Ask for money, and get advice, Ask for advice, get money twice" ~ Pitbull Building investor relations starts way before you formally start fundraising and continues after u’ve closed..So seek advice and invest in the relationship before u expect them to invest in ur startup. Also, Investors luv helping out, but u gotta help them help u! Do your research before the call, ask meaningful questions and be clear with ur ask! 🤛🏽Give First I try to find ways to add value to investors, they may be the ones writing the check but u can still offer value! E.g: summarize their recent blog as a twitter thread, share an intro that’s mutually beneficial, tell other founders if you found them helpful 🚫Understand a “No” is a “Not Now” - you will get a TON of Nos, it’s part of the journey. After every No, I would do the following: 1. Understand why it was a no, if there is a recurring reason, see if you can fix it 2. I would ask permission to add their email to our investor update ✅Send Investor Updates even when you have no investors - u don’t need investors on ur cap table to start sending updates, investors invest in lines not dots, give them proof of traction & watch those Nos —> Not Now —> Yes (Upcoming post: I’ll share 3 actual samples of our investor updates from 2021, 2022 & 2023) 🚝Accelerators/Incubators - I applied to accelerators of all sizes & shapes as long as they came with funding! Our first check of $25k came from 11 Tribes Ventures as part of the OCEAN Programs.. we used this funding to get our MVP built in less than 6 weeks and were able to leverage the momentum to raise funds Note: Watch out for the scammy ones, there are plenty! 🤩Leverage optionality - we used Republic ECF to complement our fundraising efforts, it’s a great way to raise funds, build community & show momentum! In fact we enjoyed ECF so much, we currently have a campaign open: https://lnkd.in/ef5-c6WN

"Stories are working great in investor meetings Except we're struggling with one thing..." 😖 An awesome founder / fund manager shared that with me Their struggle? 𝗧𝗵𝗲𝗶𝗿 𝘀𝘁𝗼𝗿𝗶𝗲𝘀 𝘄𝗲𝗿𝗲 𝘁𝗼𝗼 𝗹𝗼𝗻𝗴 It's a challenge we see with lots of investment boutiques • Founder / fund managers want to be transparent • They're siked to show their process at work • It can result in stories that are long and complicated Here's what we worked on to solve it: 1️⃣ 𝗚𝗶𝘃𝗲 𝗮 𝗺𝗲𝗲𝘁𝗶𝗻𝗴 𝗮𝗻𝘀𝘄𝗲𝗿, 𝗻𝗼𝘁 𝗮 𝗗𝗗𝗤 𝗮𝗻𝘀𝘄𝗲𝗿 The meeting answer hits the most important points. The due diligence questionnaire or RFP will unpack all the details. If the investor wants to dive deeper, they'll ask, and you'll go there! 2️⃣ 𝗧𝗮𝗹𝗸 𝗮𝗯𝗼𝘂𝘁 𝘁𝗵𝗲 "𝘁𝘆𝗽𝗶𝗰𝗮𝗹" 𝘀𝗮𝘃𝗲 𝘁𝗵𝗲 𝗲𝘅𝗰𝗲𝗽𝘁𝗶𝗼𝗻 Focus on the middle of the fairway by starting your answer with "typically we..."  There's always an exception or nuance. You'll get there when you get there. 3️⃣ 𝗘𝗺𝗯𝗿𝗮𝗰𝗲 𝘁𝗵𝗲 𝗥𝘂𝗹𝗲 𝗼𝗳 𝟯 Human brains are wired to process and recall information in patterns of three. So, give yourself 3 bullets to answer any question. 🎯 Here's what that looks like: 𝗤: How do you collateralize a deal? 𝗔: Typically we collateralize a deal with the saleable operations of the company. Those typically fall into three categories: -- retail operations -- manufacturing operations -- cultivation operations 💡 𝗣𝗿𝗼-𝗧𝗶𝗽: 𝗕𝗿𝗶𝗻𝗴 𝗶𝘁 𝘁𝗼 𝗹𝗶𝗳𝗲 𝘄𝗶𝘁𝗵 𝗮 𝗽𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝘀𝘁𝗼𝗿𝘆 Give a case study of a deal How you collateralized it What the outcome was >> What would you add to the list? << Short and sweet is strong and mighty ----- Enjoyed this post? 👍 Like 💬 Comment 💌 Share 🔔 Subscribe My posts help boutique founder / fund managers use story to have better meetings with investors. #investments #funds #founders #sales #capitalraising #fundraising #storytelling

I always get asked how to move a conversation forward when you're in the limbo stage after that first or second investor meeting, and you, as the founder, don't know how serious they are. I've got a suggestion. Ask the investor if they'd like to set up a meeting for you to run them through your financial model. - Your financial model tells your story. - It demonstrates your growth trajectory. - It displays your expansion plans. - It shows your revenue streams. - It proves your grittiness. - It exhibits your team. And you should know it inside and out. You should be able to drive the model and the conversation. And, you should do this without your CFO. Be prepared to show them what their investment will directly do for your business. Here's an example: Let's say you're talking to them about investing $25K in your CPG company. In that discussion, work this into the conversation: "If I receive your investment of $25K by the end of next week, I'll use $10K for marketing and slotting fees for my new retailer, $5K for inventory, and $10K to hire the fractional person I've had my eye on. As you can see from the model, I'll see the benefit of your investment within two months. It will help me grow revenues by Y%, improve my margins by Z%, and accelerate my growth in that retail channel by A% faster than if I received that cash in 3 months." The investor will see how detailed you are, how well you know your numbers, KPIs, and metrics, and understand the power of their money - and your respect for it.

I asked 8 founders that have attracted more than $4B in VC funding how to run a smart fundraising process. Here are my five favorite lessons: 1. Keep investors warm. Even when you’re not fundraising, it’s worth carving out time to talk to venture capitalists. Use it as a chance to hone your storytelling skills, discover potential weaknesses, and gauge which investors are most interested in what you’re building. 2. Run a tight process. When you are ready to raise a round, do it with conviction. Raising in a half-heartened manner is a recipe for a drawn-out process with little momentum. 3. Raise on story or metrics – not both. Focus your fundraise on either a galvanizing narrative or your strong numbers. If you try to tell both stories simultaneously, you may end up with a vaguer and less compelling pitch. 4. Optimize for the right partners, not the highest valuation. It may be tempting to go with the term sheet that values your startup most highly. Often, that’s the wrong decision. Instead of optimizing for valuation, pick the investors that can do the most to help your business over the coming years. 5. You only need a few yeses. Rejection is an inevitable part of fundraising. Even the hottest companies are unlikely to be a fit for everyone. When you’re in the midst of a tough raise, it’s worth remembering that you only need a couple of yeses to close a round. Find the true believers! Thanks to Christina Cacioppo, Immad Akhund, Jack Altman, Mathilde Collin, Trae Stephens, Avlok K., David Hsu, and Pedro Franceschi for weighing in! You can learn much more in this Generalist guide: https://lnkd.in/eskQpspb

Shifting the Narrative in Resource Mobilization As a resource mobilizer, I am often confronted with the challenge of narrating the genuine stories of grantee partners in Africa. These narratives are critical for fundraising and awareness but pose a delicate balance: how do we convey the needs and opportunities without perpetuating stereotypes or diminishing the dignity of those we aim to support? The prevailing view among many is a monolithic Africa plagued by adversity and dependence, which is inaccurate and unjust. It does a disservice to the resilience and agency of our partners. The imperative is to change the narrative and transform the communication approach to resource mobilization. Humanizing the Narrative: To humanize our narrative, we must begin by acknowledging the strength and capacity of the communities we work with. Storytelling must shift from depicting vulnerability, despair, and desolation to showcasing empowerment, resilience, innovation, and progress. This doesn't mean we gloss over the challenges; instead, we place them within a context emphasizing agency and potential. The Power of Partnership: Our narrative must focus on partnership. We are not saviors, but allies. The communities we work with are not passive recipients but active participants in their development. This partnership approach fosters a narrative of collaboration and shared goals, honoring their intelligence and creativity. Showcasing Success: Nothing changes the narrative more powerfully than success stories. These stories need to illuminate the pathways from challenge to achievement, with the voice and vision of local leaders at the forefront. We must amplify their successes, strategies, and innovations to inspire and inform others. Empathy vs. Pity: Empathy connects donors with grantee partners on a human level, recognizing shared dreams and aspirations. Pity, on the other hand, creates distance and disparity. Our communication should invite empathy by sharing experiences, hopes, and the common humanity that binds us all. Educating Donors: We also bear the responsibility of educating our donors. It's not just about raising funds; it's about raising understanding and building a community of informed supporters. This includes confronting and correcting misconceptions and offering a more nuanced and comprehensive view of Africa's diverse contexts. In conclusion, in resource mobilization, the stories we tell matter. They can shape perceptions, influence actions, and ultimately impact the lives of those we seek to support. As we get into 2024, let's mobilize resources in a way that respects and uplifts our grantee partners. This is not just a fundraising strategy; it's a commitment to integrity and a testament to the resilience and ingenuity of the communities with which we partner. Together, we can change the narrative and, in doing so, change the very nature of giving. #ChangeTheNarrative #EmpowermentOverPity #Resourcemobilizationwithaheart 

Founders: here's everything you need to know about how to get the most out of your investors & advisors (bookmark these tactics if you're fundraising right now): Many people will tell you that giving up .25% or .50% of equity for an "advisor" isn't worth it. I argue those people just didn't know how to extract the value out of the relationship or simply picked the wrong advisor. And in many cases, the value is provided in one conversation 4, 5, or even 10 years down the road when that advisor makes an intro that leads to an M&A or fundraising event. I know this because I sold my company through a connection of one of my advisors! The important thing is to pick the right people to work with. Here are a few specific tactics to keep in mind: 1) First, choose people who have deep, tangible operating experience in your space. ➝ Do not pick the "super famous" (but too far removed to help) person. You need someone who can push back...not from an armchair quarterback position, but from in-market experience. 2) Second, it's on YOU to set the cadence, agenda, and depth of the meetings. ➝ Do not expect the investor/advisor to reach out proactively or even come prepared at all. You must provide all the prep work they need. Provide it in advance and again at the beginning of the meeting. I know it sounds silly - but if you want to get the best out of it, make it easy for them. 3) Mine their connections for partnership & exit opportunities. ➝ Go on LinkedIn and find out who they know that you want to know.  ➝ Prepare the intro blurb and send it to them to get the intro.  ➝ Invite them to be on a podcast with you so they have a reason to share your story 4) Trust your advisors and investors. I can't remember how many times I rolled my eyes at various feedback I was provided...only to be proven wrong 6, 12, or 24 months later. You know your business better than any advisor, but they have experienced the patterns, made the mistakes, and learned from them. Take note. We all believe that our situation will be different. "Surely my team wouldn't react the way they experienced." "Surely, I will be able to overcome investor objections - I won't be subject to the same issues they are describing." Wrong. Swallow your pride and adjust your direction to avoid the pitfalls of others. You may be the unicorn...but I would prepare to be the donkey just in case. How do you get the best out of your mentors, advisors, and investors? Let me know in the comments.

I've invested in two-dozen early stage companies, and have seen one main problem with almost all of them: Startup founders don't regularly communicate with their investors after securing funds. Why does this happen? It's not because founders don't want to send updates, they just don't have a plan. After analyzing the founders that DO do this really well, I found they follow a sequence like the one here. Use this as a template: 1. Introduction - Start with a Personal Note: Talk about your current life situation briefly (milestones, etc.) - Highlight what you will discuss in the update, especially any requests for help (introductions to people/companies/organizations, hiring needs, amplification of messaging, etc.). 2. Team Updates - Introduce any new team members and their roles. - Discuss any significant team milestones or planned hires. 3. Sales/Accounts - Describe new partnerships, distribution channels, or significant sales metrics. - Highlight any challenges or negotiations. 4. Financials - Discuss your current financial situation. - Include any investments, rounds, or significant changes in revenue. 5. Product/Service Updates - Discuss new product/service launches or improvements. - Address any discontinuations or phase-outs. 6. Conclusion - Offer a brief summary and express enthusiasm for what's next. - Ask for help where you need it (introductions, hiring, amplification of messages in public, etc.). Your investors want you to succeed. Communication doesn't need to be hard or haphazard. Use this template to talk to your backers each quarter and you'll find more & more of them want to help you. #startups #founders #angelinvesting