When you’re a startup entrepreneur or small business owner, you’re all about ideas.
You have a plan to make the world – or some small part of it – better, whether that’s more efficient, more equal, more convenient, or just more fun. You’ve spent months, years, maybe even decades of your life with your idea: researching, refining, revamping, reimagining, and all the while dreaming of the day that those ideas finally materialize in the real world.
By the time you get to the point where you’re ready to launch your first investor fundraise, that day is so close you can practically taste it. After all, investors have the one thing that stands between you and transforming your dreams into reality: capital. Investors provide over $100 billion to startup companies every year. And they are idea people, too: passionate about helping good ideas get off the ground – even if that passion shares the stage with a concern about bottom lines.
But despite the absolutely essential role investors play in the lives of startups, there are surprisingly few quality resources for entrepreneurs to turn to in order to get reliable, straightforward information about investors, what they look for, and what entrepreneurs need to do in order to successfully earn their support.
Our goal with this guide is to change that, starting with some good news and some bad news.
Good News and Bad News
The good news is that now is an incredible time for startups to connect with investors that share their vision. The internet has created and continues to create new ways for entrepreneurs to reach out to Investors, and the passing of the JOBS Act in April 2012 and the subsequent rise of crowdfunding has forged new pathways to investor wallets.
The bad news – well, not so much “bad news” as simple fact – is that investor fundraising still takes a lot of work. It’s a grueling, time-consuming, at times frustrating process. If investments were made in companies based on merit alone, the world would look a whole lot different than it does today. The fact of the matter is that there are a lot of other factors that go into investors’ choices of which opportunities to invest in and which to let pass.
The purpose of this investor guide is to demystify the investor search somewhat, and to help entrepreneurs put themselves and their businesses in the best possible position to get the support they need. Before we dive in, here are a few thoughts to carry with you through the chapters to come.
Know Your Business
It will become clear pretty quickly as you proceed through this guide that a lot of the investor search process—the kinds of investors you’ll pitch to, how you’ll structure your fundraise, what your crowdfunding profile will look like – depends on the particulars of your specific business: industry, size, stage of development. Before you get the ball rolling on reaching out to investors, be sure that you know where you stand on all of those axes, and that the needs and goals of your company are clearly defined.
As an entrepreneur, you are your company’s best advocate and its biggest cheerleader. Nobody knows your business better than you do, and that’s a strength that you’ll want to play to as you pitch to investors. Be clear with investors about who you are and what your vision is. That’s the fun part of pitching to investors, after all: getting the opportunity to introduce your company and make other people as excited about it as you are.
Practice Makes Perfect
As we’ve touched on already, and will touch on again in the course of this guide, investor fundraising is a time- and effort-intensive process. You’re going to put a lot of hours into preparing your materials, refining your pitches, and researching, contacting and pitching to various investors, and you may not see the payoff for those efforts right away. It may be weeks before an investor responds to your email, or before you land your first in-person pitch opportunity. You may hear “no” from investors dozens of times before you finally hear your first “yes”.
But it’s vitally important that you don’t become discouraged when investors aren’t immediately lining up to write you a check. Keep in mind that raising funding isn’t about finding just any investors: it’s about finding the right investors for you and for your business. Each rejection brings with it an opportunity to strengthen your business plan and improve your pitch for the next time around. Be patient, be relentless, and be ready to learn throughout the process.
There Are No Guarantees
The goal of this guide is to give entrepreneurs the tools they need to successfully pitch their company to investors. That is not to say that entrepreneurs that follow the advice outlined in this guide are certain to get their funding. If you’re looking for a foolproof checklist – “Do this, this, this and this and you’re 100% guaranteed to get funded” – keep looking, but be warned: you’ll be looking for a very long time.
When it comes to investor-based fundraising, there is no such thing as a sure thing. Every investor – and every company – is different, and so is every fundraise. We have compiled a collection of pointers and best practices to get you as far down the road as we can, but at the end of the day you are your own best resource. The more information you seek out, the more you prepare before launching your fundraise, and the more proactive you are throughout the process, the better your chances are of seeing the results that you’re looking for.
What You’ll Find in This Guide
This guide is designed to help entrepreneurs navigate the tricky waters of finding, contacting and presenting to investors. We’ll touch on a number of different topics related to that process in the chapters to come, from the kinds of things investors look for in a potential investment, to the materials you’ll need to prepare before you talk to investors, to pointers for preparing pitches to investors across different formats. We’ll also provide some resources and tools to get you started in the fundraise process, and answer some frequently asked questions about investors and investor-based fundraising.
Our hope is that this guide will help you to orient yourself and your company within the sometimes bewildering process of raising capital from investors, and point you in a direction – or several different directions – that will lead you toward a successful fundraising experience.
One Last Thing…
Again, the road to investor-based funding is a long one. It takes time, it takes work, and it takes determination to get an investor’s attention, and then keep it through the numerous stages that lead up to the ultimate goal of securing the check. When you’re right in the thick of it, it’s easy to get disillusioned, and lose sight of the reason that you decided to subject yourself to the whole ordeal in the first place.
So as a final piece of advice before we plunge into the melee: keep your eye on the prize. Remember that the reward at the end of this long, arduous process is getting your company the money it needs to thrive, and seeing your vision come to life. And that’s an idea worth holding on to.