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After spending an hour on a call today with a new seed fund it really got me thinking about the importance of startup founders and CEOs spending time designing their investor approach. Too often I have seen startups jumping from one lily pad to the next hoping to find one investor at a time to keep them afloat. That’s a fool’s game and usually leads to a loss of leads and the stalling of true funding activity. Design your approach – round by round. Know how much cash you need and how much runway that will give you. Then plan – investor by investor – how you will raise that amount. Don’t leap from lily pad to lily pad – put a stake in the ground as to the amount and then go after it. From one investor or from multiple investors.
Do your research! Map out who you know – from friends and family to angels to venture funds. Sure, the traditional venture capital fund will often only consider multi-million dollar rounds – and they have good reason for that. They have limited partners with ROI expectations, they know the odds of success, and they must carefully chose on what and how they spend their due diligence budget. If you are later stage, that can all add up to the funding you need to succeed. But if you are early stage, that may not be available to you.
But even the earliest stage startups and founders have alternatives available to them – friends, family, seed funds, accelerators. Heck, I even knew founders that financed their early years by winning business plan competitions. Which brings me back to my point – this fund we talked to is often the first money in, is willing to take risks, and IS LOOKING for deal flow. They also work with their portfolio companies to find additional investors. But how can you find investors like that? How will you connect with those individuals or funds that want a piece of your action? Your challenge is to find them: all of them whether funds, individuals, angel groups, or even companies aligned with your value proposition. How do you find them? How do you approach them? How do you position your “ask” to appeal to them? How will you pare your list to a manageable number of unique approaches?
Design all of that into your Investor Approach. Do you research – inventory your connections, seek assistance from your supporting innovation hub, mentors and connections. Build a system around how you want to do that. Build relationships, keep people apprised of your progress and your needs. Do all of that by design, not serendipity. Use online tools at your disposal to find the needle(s) in the haystack. It may take multiple attempts, but a planned and designed approach will pay results. With all the hard work you’ve put into your business you owe it to yourself to not shortchange your funding efforts.
At WKI, we are building the design tools to enable you to design your investor approach.