Bonus Fundraising Tips For Startups

What drives you as a startup founder? It’s probably that you’ve seen a problem in the market that you believe you can attack more effectively than the incumbents. That means that by its very nature your business is going to be different to your competitors.

This is an important quality that will drive your startup’s success. You need to make sure investors see those differences.

This is particularly true at the pre-seed stage, where investors don’t often have an MVP to consider and are instead looking to support great teams of visionary entrepreneurs.

Yes, you need to have done your due diligence, have the market validation, and have the pitch deck and other supporting materials to present your case. While the focus should always be on honing your pitch so that it gives investors what they need (and  has the X-factor that will inspire them), you should not overlook the value of networking.

Fundraising tips and presenting yourself as the investment opportunity

Some entrepreneurs do struggle to be the kind of extrovert that investors like to see at the pre-seed stage. If you’re naturally an introvert, finding a solution to this challenge should be your first priority. There are plenty of techniques that naturally introverted founders can use to do this, from practicing the elevator pitch in front of a mirror, and having a more naturally extroverted co-founder can help.

There are also plenty of things that you can do to stack the odds in your favor, by understanding how to find the right investors, and how to present them with information before you’ve even had the first meeting.

1) Research means everything, however you find your investors

One highly useful way to get the foot in the door is to approach your shortlist of ideal investors via a warm intro. If you know someone that can introduce you and vouch for you to an investor, then they’re going to be more inclined to listen.

By their nature, warm intros are a luxury for the well-connected. However, it is something that can be built towards by joining startup groups and focusing on growing the network as you lay the groundwork to start pitching for pre-seed funding.

One thing to note, however, is that a warm intro is not a free pass. You do still need to go into the meeting fully prepared, and having researched the investor and their portfolio. The warm intro is like having the door opened for you. However, the ultimate success, regardless of whether there is a warm intro or not, will come down to your startup, as well as your preparedness for the meeting.

What if there is no warm intro?

It gets harder if you can’t find someone to make the warm intro but, of course, not impossible. 

In these circumstances, your priority should be to make sure the investor understands why you’re reaching out to them, specifically, and asking them for money in the first place. 

It might be that they have particular expertise, a track record with companies like the one you’re founding, a particular resource or network they can give you access to, and so on. Being able to explain why you are interested in this specific investor will go a long way to convincing them that they should be interested in your startup.

2) Build confidence in yourself—remember you’re equals!

The right investor for you is one where you can walk out of the meeting and feel like you’re not being asked to pander to a higher power. 

When you’re talking to investors, remember that you have not only got an excellent idea for a startup, but you have also taken the time to validate it. What you have is an excellent opportunity for the investor. 

They’re not giving you money as a favor—you’re equals and their investment is mutually beneficial.

The percentage of the startup that you’re willing to sell might end up being worth a lot of money and the investor should be as interested in having this meeting as you are. None of this is to suggest that you should approach meetings with arrogance or aggression, but being confident in your vision and validation will help you present your business as the opportunity that it really is. 

If you walk out of the meeting with the impression that the investor understands your vision and the industry that you’re launching in, then you know you’ve found a good candidate for your pre-seed capital.

3) Learning the art of being succinct

The window to set a strong impression when introducing your business in short. Having a succinct and compelling introduction that is tailored to the context of the meeting can mean the difference. 

For example, having a business one liner is valuable for a chance meeting at a social function. However, with the modern investor, you’ll just as often be introducing yourself over a platform like WhatsApp, so having a perfectly-written paragraph ready to go there is critical. An email intro paragraph might be a little longer (but not too much longer!). And, once you get the chance to present your deck, you’ll want a rehearsed opening minute to introduce your idea all over again. Having each of these ready to go at an instant’s notice—both written and verbal—is an excellent way to make you look like you’re on the ball when asked the question. 

One thing that will always be consistent is to “start with why,” to use the Simon Sinek truism. Remember that saying “we believe that the problem of X is massive and growing, and that’s why we came up with Y” is a much more compelling proposition than “we’ve built Y for the problem of X.”

4) Make your story relatable and evocative!

The other reason that the first 30 seconds are so important is that that’s where the storytelling begins. We can learn a lot from Hollywood in this way. Action blockbusters will start with some kind of explosion. Horror films will start with a jump scare. Film directors are acutely aware that compelling storytelling happens when you immediately draw the audience in, and this applies to your startup pitch, too. 

People are inherently not driven by logic, and all the data points and market validation in the world won’t matter for much if there’s no story behind it. 

Research shows that appealing to a person’s emotion, and not their logic, will make them more receptive to your ideas. To give a simple example of this in motion: anti-smoking campaigns have been far more effective at reducing smoking rates by showing people images of a diseased lung than presenting them with facts and statistics about lung disease.

What we’re talking about here is the “Steve Jobs effect.”

The more technical term for it is the “reality distortion effect” and has subsequently been applied to other maverick entrepreneurs as varied as Elon Musk and Adam Neumann. Famously, the personal charisma of politicians such as Donald Trump and Bill Clinton have also been attributed to this. 

What is common to all these people is that reality no longer seems to matter when they talk. Often the data will suggest the exact opposite to what they’re saying, and yet it’s something that you fundamentally want to get on board with. 

It’s a powerful tool if you can master it.

5) Practice everything

A top athlete trains their bodies for years before they get a shot at the major leagues. Artists and authors hone their style over decades. Actors have rehearsals for a reason. Do you think the top business leaders practice before presentations?

Even the mighty Steve Jobs—the very model of a good presenter—had a methodical and highly rehearsed approach to his presentations. He would practice for a full month before he had a presentation.

You don’t even need to buy a video camera, as the entrepreneurs of yesteryear did. Your phone will have a camera. Set it up, and record your pitch presentations. Create a script for cold calls and run over it with your co-founder before dialing numbers.

Join an improv class, if you’re not a natural performer, and get some feedback around your presentation. Most local community theaters have classes. 

But—and this will sound counterintuitive—don’t over-practice, either! Investors see many presentations, and when they are over-rehearsed it no longer has the conversational element that a good pitch does. 

6) Prepare for tough questions

One of the most useful things you can do at the start of the pitching process is to create an “objections” document. Pay attention to the questions, concerns and criticisms that come in, and update the document after each meeting. Before the next one, take the time to look at the document and prepare answers—good answers—for each question.

However, you should also expect that in any presentation—no matter how many you’ve already given—you will probably get a question that you simply don’t have an answer to. This is a consequence of breaking new ground—you can’t anticipate every question that investors will have of it. 

Understand in such circumstances that it’s better to simply acknowledge that you don’t have an answer right at the moment, then try and cover your tracks. If you’re confident in what you’ve done so far (and you should be), taking a question “on notice” and having the answer for the next interaction isn’t going to reflect negatively on the rest of the presentation. Being caught trying to manufacture an answer on the spot, however, will.

7) Foster the FOMO!

Finally, perhaps the most important thing to understand is that you’re aiming for a straight answer from an investor. Inexperienced founders often fall into a trap whereby an investor will express interest in their pitch and ask to be kept in the loop. It sounds like a lead and an open opportunity, but often an investor is just stalling for time. No investor wants to be on public record for having said “no” to a startup that becomes a unicorn, so instead they will string the founders along in the hope that someone else steps in to invest.

Of course, you don’t want to be aggressive about this, so the most effective pathway is to remember that what you’re pitching is an excellent business opportunity to get in on the ground floor of something special. Investors may be risk averse, but they’re also human, and if you’ve spun the story well, they’re not going to want to miss out. Play on that and gently encourage the investor to firmly commit with a follow-up.

Are you pre-seed ready?

With this, you’ve reached the end of the pre-seed playbook for startup founders. There’s been a lot to digest! However, you now have all the tools, processes, and thought exercises that effective entrepreneurs and founders have to go through. With the VC space more dynamic than ever and unicorns popping up in every sector, the opportunity and money to make it happen are there.

And with that we’re now just left with the burning question: you’ve got your startup idea, and you now know the steps that will take it through the pre-seed stage… What are you waiting for? 

The life of a founder and entrepreneur is at your fingertips!