This is a follow-up from our August 2019 blog post on Fundraising Strategy 101, where we introduced a step-by-step winning strategy for fundraising for a tech startup, across the following principles of:
- Unbelievable preparation for the fundraising process.
- Unwavering belief in your product, team & up-to-date achievements.
- Unrelenting persistence in achieving the goal of landing a term sheet.
And focusing on creating and delivering a powerful story, including:
- Why this matters.
- What this means to the world / your target audience.
- What happens if you succeed in this business venture.
All the points above still hold, and probably even more since the global uncertainty levels have raised exponentially in the last month or so, during to the current pandemic affecting the behaviors of all market participants from FFF, angel investors & Groups, VC’s and PE fund managers and their respective LP’s.
In the current situation of diminishing economic activity, with the complete shutdown of industries and sectors across the globe, it’s obvious that the “easy times” of the last decade are gone forever and professional investors need to actually support their investees to navigate through tight cash management, pivots into new areas/ products/ services, a whole lot of redundancies and even direct shutdowns/ write-offs.
So the first thing any professional investor does is keep dry powder (cash) at hand. Thus being able to provide bridge financing (extra cash) to their existing portfolio of investments since runways need to be recalculated and prolonged for at least a 12 month period, with sales figures going southward in double digits.
Having said that, professional investors, are still looking for investment opportunities even though their daily schedules has changed dramatically through WFH (a.k.a. no Partner meetings), travel restrictions do not allow to meet founders F2F, uncertainty levels across the globe increase on a daily basis and they still need to keep dry powder for their existing investments.
As a founder building something out of nothing in the middle of a global crisis, you need to over communicate your story and its relevance to the current and the future needs of the clients you serve.
As a founder you need to consider sharing more information earlier that latter with your potential investors and engaging your #2 personnel in the fundraising process from the very beginning. You need to provide client references and endorsements early in the process and prepare them (your clients) to answer on investor requests, also providing personal references for the founders themselves, will assist the preliminary desktop research undertaken by the professional investor.
Last but not least, in the era where videoconferencing is the new F2F the first impression of a team plays an important role in decision making, so have everybody prepped for video conferencing (attire, background, controlled noise levels, agenda, bandwidth & Master of Ceremony (MC) to navigate) and have the presenter work with two screens; one running the presentation and one monitoring the body language of the audience and all of this this takes practice (aka time & effort).
These are few tips and tricks we have learned from our current fundraisers both in the EU and the USA.
Want to learn more on how-to-do, drop us an email and we will be happy to share our knowledge and insights with you!
Christos Lytras – Managing Partner